I plan to donate clothes to a charitable organization such as the Salvation Army. Where can I found out what the fair market value of the clothes -- as well as household items I plan to donate -- so I can write off my donation on my tax return? Does the new tax law change those rules?
As you mentioned, you will only be able to deduct the fair market value of the clothes and other items that you give. That's the depreciated value of used goods, such as the price you'd pay in a thrift shop rather than the cost of buying them new. And the new tax law did change the rules a bit. You can only take a charitable deduction for giving away items that are at least "good" condition, unless the item has been appraised at more than $500. The change took effect when the Pension Protection Act was signed into law on August 17.
"You can't donate your trash and get a tax deduction," says Christine Bragale, director of media relations for Goodwill, which has to discard about 5% of the clothing contributions received every year because it is in such bad condition. Bragale offers a helpful rule of thumb: "If you would give it to a relative or friend, then it's fit to donate," she says.
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Many people underestimate the amount they can deduct because they have no idea how to value the items. The Salvation Army has a useful valuation guide to help you determine the deductible value of your items, based on the cost of similar goods in its stores. The site lists low and high values, and it's up to you to decide where your items fit based on condition. Another good tool is TurboTax's It's Deductible software, which gets its figures from research at resale stores and eBay data. It also automatically fills in IRS Form 8283 when your noncash donations exceed $500.
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