The Internal Revenue Code allows you to deduct the value of any property you donate to a nonprofit organization that promotes literacy. Most donations to a library that obtains funding from local governments are organizations that qualify you to take a deduction. However, if the library provides you with special benefits not available to other patrons in exchange for the book donation, you must reduce the deductible amount by the value of that benefit.
Value of Books
The IRS requires you to assess the value of the books you donate when calculating the deductible amount. The tax authority governing charitable deductions does not require you to use specific valuation methods; however, it does acknowledge that the most accurate assessment will take into account the price you can sell the books for on the open market. Determining the potential sales price of the books requires you to consider the condition of the books. Torn and missing pages, markings and creases that exist will reduce the value of the book. The reduction in value attributed to these defects may be more substantial if the books you donate are rare or collectible.
You must take great care in assessing the value of the books. The IRS deters taxpayers from assigning baseless values by imposing a valuation penalty. If you overvalue the books by 150 percent or more of their true value, you may incur a 20 percent penalty on the amount of tax you underpay that directly relates to the valuation error. In the event the valuation you report is 200 percent or more of the books’ true value, the penalty increases to 40 percent. However, the IRS has the authority to waive the penalty if you provide reasonable cause for reporting the higher value. For example, if you provide the written appraisal you obtained prior to preparing your tax return; the IRS may find you were reasonable in relying on the expert’s advice.
The IRS limits the amount you can deduct in a single tax year for all charitable donations you make. Generally, you can deduct an amount that does not exceed 30 percent of your adjusted gross income for that tax year. If your total charitable contributions for the year exceed the 30 percent limitation, you can carry the excessive amounts forward and deduct them in any of the next five tax years. The limitation increases to 50 percent for the donations you make to a “50-percent-limit organization.” The IRS releases a publication that lists every organization that qualifies you for the higher limitation.
Claiming the Deduction
Charitable contribution deductions are only available if you are eligible to itemize your deductions on the Schedule A attachment to your personal income tax return. You are eligible to itemize if your total deductible expenses for the year, inclusive of your book donations, exceed the prevailing standard deduction amount for the year.
Jeff Franco's professional writing career began in 2010. With expertise in federal taxation, law and accounting, he has published articles in various online publications. Franco holds a Master of Business Administration in accounting and a Master of Science in taxation from Fordham University. He also holds a Juris Doctor from Brooklyn Law School.