How do I deduct Goodwill donations?
Part of spring cleaning for a lot of folks includes clearing out closets for old or unused items. For most of us that means that we are taking them to Goodwill, The Salvation Army, or loading them onto a donation truck that comes to our home - but what does this mean for your tax return?
If you itemize deductions, those donations can turn into tax savings - many times bigger than what you would think. Keep track of what you donated and it can add up by the end of the year.
For annual donations of up to $500 this is reported as a total number and added to your other deductions.
If you give more than $500 of value during a year, we have to include additional information - we can get most of it from the receipts they give you. To complete the additional form we need the following:
Name and address of the organization
Date of contribution
Description of property distributed and goods donated
Cost basis (what you paid) for item(s) - this can be estimated!
Wondering how to find the fair value of items? These are usually estimated at the "thrift store value" for Goodwill donations, but can be confusing. Luckily, there are some good online tools for determining this number. Goodwill has its own guide here or there is a tool a lot of clients use called It's Deductible that is very detailed. We recommend using a list like this to determine what the value is.
Please note, we are not able to determine fair value when we prepare a return.