How To Properly Document Your Non-Cash Charitable Donations ...

If you want to donate your old stuff instead of having a yard sale, you must make sure that what you want to donate can actually be deducted on your tax return. How do you know? Here?s a simple rule to follow: If you?re unsure whether your item qualifies for a tax deduction, then consider this ? if you would give it to a relative or friend, then the item is most likely in good condition and is appropriate to donate. The official wording from the IRS is this: clothing and household goods must be in ?good used condition? or better in order to qualify for a deduction. The next thing you must do is to determine the fair market value (FMV) of each item. FMV is simply what the item is worth if you were to sell it in a true arms-length transaction between a willing buyer and a willing seller. In other words, what would the item cost if you were to buy (or sell) it in a yard sale, church rummage sale, or at your local Goodwill Industries thrift shop? Obviously, coming up with the FMV can be a challenge. So don?t just ?wing it.? Instead, get some help. An excellent resource is the Goodwill Industries, which has a free publication called ?Valuation Guide for Goodwill Donors.? Free copies of this document are available for download at the Goodwill Industries website. Goodwill?s ?Valuation Guide? is quite helpful for the following reasons: 1. It gives you a great list of the most common items that are potential donations. There are two general categories: 1) Clothing and Accessories and 2) Household and Miscellaneous Items. You definitely want to go through this list to get ideas on what you can donate. It?s easy to overlook things that you might otherwise ignore as possible donations. For example, under clothing and accessories, there are several sub-categories, such as tops, bottoms, dresses, suits, sweats, sleepwear, outerwear, swimwear, shoes, hand-carried items, and belts. Then under each of these sub-categories you?ll find more sub-categories (should I call them sub-sub-categories?). So for ?tops? you?ll see shirts/blouses, sweaters, t-shirts, tanks, and vests. And on and on it goes. 2. This list also provides price ranges for every line item, again with sub-categories for women?s, men?s and children?s clothing items. Within each sub-category is a ?low-high? price range. For example, under women?s shirts/blouses there?s a price range of $2-$12. So here?s where you just want to use some common sense. A very old women?s blouse would be closer to the $2 value; a newer, more fashionable blouse could be worth the high end of the range. The Salvation Army website also has an excellent resource for determining FMV. It?s called the ?Donation Value Guide? and it includes several categories that are not found in the Goodwill Industries ?Valuation Guide?, such as appliances, automobiles and Furniture. So if you have any of those ?big ticket? items, be sure to get some guidance here. Once you?ve got all your stuff organized, simply go through your piles and make a list of each item and it?s FMV. This list doesn?t have to be fancy. You can do it on your computer in a word processing or spreadsheet program. Or just dedicate a 3-ring spiral notebook to this record-keeping chore. But you?ve got to have a detailed list showing each item donated, just in case the IRS audits your return and asks for documentation. And when I say that the list doesn?t have to be fancy, here?s what I mean. The list only needs two columns: Column 1 for a brief description of the item; and Column 2 for the FMV. If you?ve got more than one of the same item, you can get more detailed in your description. Example: ?blue blouse? on one line and ?red blouse? on the next line. Get the idea? Don?t make this complicated. It?s not rocket science. It?s a list. And taking a few minutes to make this list before you donate the items will audit-proof your return and give you no reason to fear should the IRS request documentation.

Like what you've read? ...Republish it and share great business tips!

Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...

We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.

The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.

" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/31718/how-to-properly-document-your-non-cash-charitable-donations "

charles taylor calvin johnson calvin johnson carl crawford mad cow disease powerball rampart