Cleaning out your home or garage can be a boon to charities, but noncash donations come with their own set of rules. The IRS expects you to use the fair market value of your donation to determine your deduction. Tools such as TurboTax’s ItsDeductible can help give you an idea of an item’s fair value and can track your donations throughout the year. For anything worth more than $500, you’re required to provide a written description on Form 8283. For anything more than $5,000, you need an appraisal, but you can deduct the cost of getting one.
Donating a car is tricky because the deduction is limited to what the charity sells it for. Bob Meighan, lead CPA at the American Tax & Financial Center at Turbo Tax, says charities can often be in a hurry to sell and may accept a lowball price, which lowers your deduction. You’re more likely to secure a higher price by selling the vehicle yourself and then donating the money.
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