How to Figure a Tax Deduction on Donated Items

How to Figure a Tax Deduction on Donated Items
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The Internal Revenue Service (IRS) allows taxpayers to take tax deductions for donating items to charity. The tax deduction for charitable donations is an itemized deduction, which means you cannot claim the standard deduction. Therefore, the deduction should be taken only if your total itemized deductions exceed the standard deduction you would otherwise be eligible to take. To determine the tax deduction you are eligible to take for your donated items, you need to know how much they could be worth and how much, if anything, you receive in return.

Get a receipt verifying the list of items that you have donated to a charity. The charity must be a qualifying organization.

Determine the value of the items based on the condition and fair market value. Some charities, such as Goodwill, publish lists of commonly donated items with price ranges. If you donate an item worth more than $5,000, you must have it professionally appraised.

Determine the value of any goods or services you received in return for your donation. For example, if you received a $10 mug in exchange for your donation, you would have to subtract $10 from the value of the donation.

Subtract the value of the items you received in return from Step 3 from the value of the items you donated to determine how much money you can deduct. For example, if you donated $500 worth of goods but received $20 in return, you could claim a tax deduction of $480.

Tips

  • When you file your taxes, you will need to use Schedule A and attach it to your Form 1040 tax return.

    If your donation gives you the right to purchase athletic tickets, 80 percent of the donation is deductible. For example, if your donation of $500 worth of items allows you the right to buy tickets to a sporting event, you could deduct $400. If you were given a $200 ticket, you would be able to deduct only $300.