The Rules for Determining Non-Cash Donations Values
- In general, the IRS requires you to use the fair-market value of the non-cash item when figuring how much you can deduct. The IRS does not define fair-market value any further than "the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell and both having reasonable knowledge of all the relevant facts." Typically, you can get an estimate of the fair-market value of your items by looking at thrift store prices, online used good sites or documents charities prepare for donors that estimate the fair-market value of commonly donated goods.
- Special rules apply to the donation of qualified vehicles, which includes cars, boats and airplanes. When you donate a vehicle, you can only deduct the fair-market value if the charity uses the vehicle. If instead, as many charities do, the charity sells the vehicle, your deduction is limited to the price for which the charity sells it. For example, if you donate a car worth $12,000 you can deduct $12,000 only if the charity uses the car as part of its work. If the charity sells the car and it only brings in $8,000 at auction, you can only deduct $8,000 on your taxes.
- If you make a donation of household goods or clothing, you can only deduct the value if the items are in good used condition. Household goods include furnishings, electronics and appliances. The IRS does make an exception to the "good used condition or better" requirement for individual household items that are worth more than $500, but it must be accompanied by an appraisal. For example, if you have a very old piece of furniture that is valuable, you could deduct it if it were in poor condition but worth more than $500.
- Any time you make a donation of a non-cash item, or a group of similar items, you must get a qualified appraisal to determine the fair-market value of the item. However, the IRS does not require an appraisal for a limited number of items including non-publicly traded stock worth less than $10,000, qualified intellectual property like a patent and certain public securities. In addition, if you deduct the proceeds from a charity selling your vehicle, you do not need an appraisal for the vehicle.