They're Worth More Than You Think!
Valuing Your Non-Cash Donations
In 1917, members of Congress worried that a tax increase imposed to fund America's involvement in World War I would have a perverse impact — namely, that citizens burdened by new taxes would cut back on donations to charity. So, along with the tax increase, Congress created a tax deduction for giving.
Ninety-two years later, the charitable-giving deduction is still with us, providing one of the most straightforward ways to reduce one's income tax liability — especially for easily valued contributions made in "cash" (i.e., cash, checks, credit-card donations).
But noncash contributions make valuation tougher. How much is that camel-hair coat worth? Or that long-unused treadmill? The likely answer: "More than you think." Indeed, properly valued noncash donations could shave hundreds of dollars off your tax bill.
Determining such valuations has become easier in recent years with Intuit's ItsDeductible software and H&R Block's DeductionPro. Each program contains a database of estimated values for commonly donated items.
ItsDeductible is bundled with Intuit's popular TurboTax software, but the company offers a free (and slightly scaled-down) version online. In either edition, you begin with a sign-up process that involves entering your filing status and income level (for tax-bracket purposes). The program then prompts you to input details about your giving.
For example, suppose you're cleaning out your clothes closets. You choose the "Items Donations" area of ItsDeductible and input the name of the charity to which you're donating. Then, you select from among 22 categories (ranging from "automotive supplies" to "toys").
Once you find the category you're seeking ("clothing"), you pick the appropriate subcategory ("women's clothing"). The software then offers a listing of styles of skirts, sweaters, pants, etc., with "estimated" values shown for each. You input the quantity ("2 sweaters") and condition ("medium"), then click "Add items."
As you add to your list of donations, a tally at the top left keeps track of your likely tax savings (based on your tax bracket).
Although ItsDeductible's valuations sometimes seem a bit out-of-kilter ($33 for a pant suit, but only $30 for a wedding gown), Intuit insists the estimates are based on fair-market data derived from "resale stores across the U.S. and from eBay." That should make the valuations defensible to the IRS.
If you are using ItsDeductible in conjunction with TurboTax, you can export your final donations report directly to IRS Form 8283 for submitting with your tax return. Otherwise, you'll have to copy values by hand to the IRS form (or type them into the PDF version available here).
H&R Block's DeductionPro — available as a stand-alone product or as part of the company's TaxCut software — operates similarly to ItsDeductible, but the valuations differ (some higher, some lower) due to different research methodology. Unfortunately, there isn't a current no-cost edition of DeductionPro online, but you can download the still-useful 2008 version free.
Whether you decide to go with ItsDeductible or DeductionPro, it's best to track donations as you make them so the details are fresh in your mind. Also before you haul your items away, take photos for additional documentation.
Finally, get a receipt from each charity, indicating what they received. The IRS requires each receipt to include the name of the charitable organization, the date and location of the contribution, and a "reasonably detailed" description of the items donated. 
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Joseph Slife is a contributing author and editor for SMI. He spent 15 years with Crown Financial Ministries, co-writing articles with Larry Burkett and serving as executive producer for broadcasting. In addition to his work with SMI, Joseph is an adjunct instructor in the Dept. of Communication at Emmanuel College in Georgia. |
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