Summer Tax Savings - How to Get a Tax Deduction For Donating Used Items

The purpose of this article is to help you prepare Form 8283, Non-cash Charitable Contributions. The rules for reporting charitable contributions on your tax return are a bit tricky, so take your time as you read on. We'll start with some of the basics on how to report what are known as non-cash charitable contributions on your federal personal income tax return.

1. You must itemize deductions on Schedule A in order to get a deduction for donating used items. So if you don't itemize, you don't get a deduction. So sorry to give you the bad news, but it's best that you find that out now.

How do you know if you itemize deductions? Take out your 2008 personal income tax return and look for Schedule A, "Itemized Deductions". It should come right after Form 1040. You should have filed Schedule A if the total of all your itemized deductions was greater than the so-called "standard deduction." Itemized deductions include things like medical expenses, state and local income taxes, property taxes, mortgage interest and, of course, charitable contributions.

2. If the total of your non-cash property donations is greater than $500, you must also file Form 8283. More on that later.

So the first important question to ask yourself is this: when you add up the Fair Market Value of your used items, is that amount greater than $500? If it's $500 or less, than you simply record the total on Schedule A, line 17. If it's more than $500, you will still record the amount on Schedule A, line 17, but you will also have to complete Form 8283, "Non-cash Charitable Contributions", which requires several pieces of information regarding your donations of used items.

3. OK, let's assume you have more than $500 of non-cash charitable contributions. So now you've go to fill out Form 8283. No problem. Here's the info you need to do that: -- Name of charitable organization (such as Goodwill Industries or Salvation Army.)
-- Address of charitable organization (street, city, state, zip code) -- A brief description of the items donated. This doesn't have to be long or fancy. If you donated a bunch of clothes and a variety of miscellaneous household items, then simply write, "clothes, household items." Short and sweet will work. -- Date of the contribution
-- Date that you acquired the used items. Just put the word "various". -- How you acquired the used items. Just put the word "purchase". -- How much you spent to buy the items. Here I've found a simple formula that I've yet to see questioned by the IRS: simply take the FMV and multiply it by 4. So if you've got $1,000 of items in FMV, put $4,000 as the donor's cost. -- Fair Market Value. We've already discussed this in the previous section of this report. This is where you put the FMV of what you are donating. This is the amount of your actual tax deduction. -- Method used to determine the Fair Market Value. Write the words "thrift shop value."

You should complete a separate line for each individual charitable contribution. So if you made three separate contributions to Goodwill on three separate dates during the year, list each contribution separately.

The total of Column (g) from Form 8283 should also be the amount that you put on Schedule A, line 17. That's all there is to Form 8283.