19 Dec How to value items you give to charity
Q. What’s the best way to value furniture that I want to donate? Not antiques, but stuff in decent condition.
A. Donating goods to charitable organizations is something many of us have done at one time or another, and if comes in handy when it’s tax time.
Whether the items consist of clothing, books, toys or other household goods such as appliances and furniture, valuing such items should not be a daunting task if certain guidelines are followed, said Cynthia Fusillo, a certified public accountant with Lassus Wherley in New Providence.
She said the first thing to realize is that fair market value (FMV) is your basis for the income tax deduction you will claim for donated goods.
“FMV is defined as the price that property would sell for on the open market,” Fusillo said. “Many organizations have lists which will provide a range of values for just about every item under the sun that can be donated.”
She said many tax practitioners will tell their clients to take photographs of items to be donated, which could come in handy in the event of an audit.
The FMV of donated household items is usually going to be much lower than what you originally paid for them, she said.
“My advice is don’t get greedy with your valuation,” she said. “When the total of your donated goods exceeds $500 in value, an additional reporting is required with your return, Form 8283, which gives the IRS some more detail such as donee organization(s), a brief description of the items donated, your original cost and the fair market value, to name a few.”
Fusillo said this doesn’t mean you should not value all of your combined donated goods at more than $500. Just be sure it’s a fair valuation that you’ve made based upon condition and desirability.
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This post was first published in December 2016.NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.