Are donated items tax deductible

 Claim a tax deduction

Your monetary donations and donations of clothing and household goods that are in “good” condition or better are entitled to a tax deduction, according to Federal law. The Internal Revenue Service requires that all charitable donations be itemized and valued.

Use the list of average prices below as a guide for determining the value of your donation. Values are approximate and are based on items in good condition.

It’s a good idea to check with your accountant or read up on the rules before you file you return. Here are some handy opens in a new windowIRS tips for deducting charitable donations.

When you bring items to one of our donation locations, you may fill out a paper donation form. The form is required if you are donating computers and other technology equipment so that we can comply with state reporting requirements. Thanks for taking the time to fill it out!

Tax information

If you itemize deductions on your federal tax return, you may be entitled to claim a charitable deduction for your Goodwill donations. 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. Value usually depends on the condition of the item. By law, a 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:

Review the following tax guides available from the IRS

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

To help you determine your donations fair market value Goodwill is happy to provide a opens in a new windowDonation Value Guideopens pdf file that offers average prices in our stores for items in good condition.

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 — applies to deduction claims totaling more than $500 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 management staff must verify that the donation receipts match the completed form and fill in the date of donation/s in this section. In addition, Goodwill’s name (Goodwill Retail Services, Inc.), store address and identification number (39-2040239) must be completed. Management staff must also provide their signature, title, and the signature date. Finally, a copy of completed Form/s 8283 should be forwarded to the Merchandise Analyst.

IRS Links for Forms and Instructions — opens in a new windowIRS Tax Form 8283 is used to report information about noncash charitable contributions. opens in a new windowForm 8282 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.

Goodwill will be happy to provide a receipt as substantiation for your contributions in good used condition, only on the date of the donation.

Goodwill Central Coast information for tax return with address of your donation center.

Rules for Giving to Charity, How to Get a Deduction

Tax deductible donations are contributions of money or goods to a tax-exempt organization such as a charity. Tax deductible donations can reduce taxable income. To claim tax deductible donations on your taxes, you must itemize on your tax return by filing Schedule A of IRS Form 1040 or 1040-SR.

For the 2021 tax year, you can deduct up to $300 of cash donations per person without having to itemize, meaning a married couple filing jointly could deduct up to $600 of donations without having to itemize. This is called an "above the line" deduction.

How much can I deduct?

In general, you can deduct up to 60% of your adjusted gross income via charitable donations (100% if the gifts are in cash), but you may be limited to 20%, 30% or 50% depending on the type of contribution and the organization (contributions to certain private foundations, veterans organizations, fraternal societies, and cemetery organizations come with a lower limit, for instance). IRS Publication 526 has the details.

The limit applies to all donations you make throughout the year, no matter how many organizations you donate to.

Contributions that exceed the limit can often be deducted on your tax returns over the next five years — or until they’re gone — through a process called a carryover.

For the 2021 tax year, you can deduct up to $300 per person rather than per tax return, meaning a married couple filing jointly could deduct up to $600 of donations without having to itemize.

The CARES Act eliminated the 60% limit for cash donations to public charities.

How to claim tax deductible donations on your tax return

In general, itemize at tax time. When you file your tax return every year, you'll need to itemize your deductions in order to claim tax deductible donations to charity. That means filling out Schedule A along with the rest of your tax return.

Weigh the costs and benefits ahead of time. Itemizing can take more time than if you just take the standard deduction, and it may require more expensive tax software or create a higher bill from your tax preparer. Plus, if your standard deduction is more than the sum of your itemized deductions, it might be worth it to abandon itemizing and take the standard deduction instead. If you abandon itemizing, however, you abandon taking the deduction for what you donated.

Things to remember about tax deductible donations

Tax deductible donations must meet certain guidelines, or you won’t get the extra cash to accompany your good deed. Here’s how to make your tax year a little sweeter.

Your charitable giving will qualify for a tax deduction only if it goes to a tax-exempt organization, as defined by section 501(c)(3) of the Internal Revenue Code. Examples of qualified institutions include religious organizations, the Red Cross, nonprofit educational agencies, museums, volunteer fire companies and organizations that maintain public parks.

An organization can be nonprofit without 501(c)(3) status, which can make it tricky to ensure your charity of choice counts.

You can verify an organization’s status with the IRS Exempt Organizations Select Check tool.

Before you donate, ask the charity how much of your contribution will be tax-deductible.

Which Donations Qualify for Deductions?

Tax law requires that deductions are allowed only for contributions that serve a charitable purpose. A recipient organization must qualify for tax-exempt status as required by the tax code and determined by the Internal Revenue Service (IRS).

The list of eligible entities includes organizations operated exclusively for religious, charitable, scientific, literary, or educational purposes; the prevention of cruelty to animals or children; or the development of amateur sports. Nonprofit veterans’ organizations, fraternal lodge groups, cemetery and burial companies, and certain legal corporations can also qualify, but only if

The IRS Tax Exempt Organization Search tool can help verify an organization’s tax-exempt status and determine its eligibility for deductible contributions. A donation to a federal, state, or local government may be eligible if the gift is earmarked for public purposes (such as maintaining a public park). Gifts to benefit a particular individual, for-profit business, or private interest do not qualify as deductible charitable contributions.

Deduction for Donated Goods Set at Fair Market Value

Charitable contribution deductions are allowed for donations of goods—such as clothes and household items—to Goodwill, the Salvation Army, and similar charities. Used clothing and household items must be in usable good condition, and the deduction amount is limited to the item’s fair market value at the time of contribution—for example, its thrift-store price.6

Special rules apply to vehicle donations. If the fair market value of a vehicle (either a car, a boat, or an airplane) is more than $500, you can deduct the smaller of:

• The gross proceeds from the sale of the vehicle by the organization
• The vehicle's fair market value on the date of the contribution
• Conversely, if the fair market value is less than $500, you can deduct the smaller of:
• The vehicle's fair market value on the date of the contribution

When a taxpayer claims more than $500 in total deductions for non-cash contributions, they must file IRS Form 8283 with their tax return. Some tax preparation software packages include calculators to help determine the fair market value of various items. IRS Publication 561  is a useful resource to help you decide the value of your non-cash contributions.

Only taxpayers who itemize their deductions can deduct donations of property as charitable contributions.7 The 2021 charitable deduction for nonitemizers is limited to contributions made in cash.  

Records to Substantiate Contributions

Taxpayers must keep detailed records to substantiate their charitable deductions. The type of record depends on the type and amount of the contribution: cash, non-cash, and out-of-pocket expenses while donating your services.

Cash contributions

Cash contributions include donations made by cash, check, electronic funds transfer, online payment services, debit cards, credit cards, payroll deduction, or a transfer of a gift card that can be redeemed for cash. To deduct a cash contribution of any amount, you must have at least one of the following:

A bank record that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution. Bank records may include canceled checks, bank statements, credit card statements, and electronic funds transfer receipts

A receipt or written communication (including email) from the organization that shows the organization's name and the amount and date of the contribution

Payroll deduction records (for example, a pay stub or W-2) that show the organization's name and the amount and date of the contribution8

Cash contributions over $250 must be backed by a written acknowledgment from the organization stating the amount of the contribution, whether the organization gave any goods or services to the donor as a result of the contribution, and a description and good faith estimate of the value of any such goods or services. Significant property contributions also require appraisals