Fair Market Value of Charitable Donations

Fair Market Value of Charitable Donations

Most likely a nonprofit organization gave you this link to help you determine the fair market value of your charitable donation.

The IRS allows you to deduct donations to a qualified nonprofit or your house of worship (church, temple, ashram etc). According to the Internal Revenue Service (IRS), a taxpayer can deduct the fair market value of clothing, household goods, used furniture, shoes, books and so forth. Fair market value is the price a willing buyer would pay for them. The value depends on the condition of the item. By law, a nonprofit or charity cannot tell you what your donated items are worth. This is something you must do yourself. To assess “fair market value” for your donations it is suggested that you consult a tax advisor familiar with market values in your region and/or review the following IRS Tax Guides.

IRS Guides to Charitable Donations

Determining the Value of Donated Property — This defines “fair market value” and helps donors and appraisers determine the value of property given to qualified nonprofits. It also explains what kind of information you must have to support the charitable contribution deduction you claim on your return. (Publication 561)

Charitable Contributions — explains which organizations are qualified to receive deductible charitable contributions, the types of contributions you can deduct, how much you can deduct, what records to keep, and how to report charitable contributions (Publication 526)

Noncash Charitable Contributions — This form applies to deduction claims totaling more than $5,000 for all contributed items.  If a donor is claiming over $5,000 in contribution value, there is a section labeled “Donee Acknowledgement” in Section B, Part IV of Internal Revenue Service (IRS) Form 8283 that must be completed. The form and instructions are available on the IRS site and can be accessed through this link, IRS Tax Forms.  A member of the nonprofits management must verify that the donation receipts match the completed form and fill in the date of donation/s.

IRS Links for Forms and InstructionsIRS Tax Form 8283 is used to report information about noncash charitable contributions to qualified nonprofits.   This form is used to report information to the IRS and donors about dispositions of certain charitable deduction property made within 3 years after the donor contributed the property.

When making a donation you should always ask the nonprofit or charity for a receipt. Although the nonprofit can not determine the market value of your items the information here should help you easily determine the fair market value of your charitable donation.