Tomorrow morning, the principal of our local church school is coming by our house with a trailer to pick up items for the annual Valley View Academy Garage Sale. We’ve got a bunch of things we haven’t used in years – some camping gear, books, printer, clothing, toys, bedding, an old refrigerator, a bicycle, skis, etc.
It used to be that you could donate things and then just estimate a total value: “I think this trunk-load of junk was worth $380.” And the Goodwill would give you a receipt and you’d assign your own value.
The IRS has gotten stricter on these things now:
To be deductible, clothing and household items donated to charity after Aug. 17, 2006, must be in good used condition or better. However, a taxpayer may claim a deduction of more than $500 for any single item, regardless of its condition, if the taxpayer includes a qualified appraisal of the item with the return. Household items include furniture, furnishings, electronics, appliances, and linens.
You also need to be sure you have a written acknowledgement from the charity of any single gift of $250 or more.
In fact, the IRS now requires you to actually inventory and assign value to each donated item. You might want to take a picture of everything laid out and use that for evidence of valuation (NOT the type of picture I posted above).
This has gotten so serious, Goodwill and others now give out Donation Valuation Guides to tell you what the IRS will think is appropriate valuation per item. Here’s a little glimpse.
Is the deduction really worth your time? Maybe.
If you give tithes and offerings, you will be above the donation floor for itemized deductions. If you have a high marginal tax rate and if you have enough donations, it will definitely help lower your tax bill.
But you’d get more money out of a garage sale (and garage sale proceeds aren’t taxable). But then you would have to go through all the work of a garage sale.