We donated a set of dinning room furniture in 2015 to a qualified charity. Got the paperwork from them too.
I was reading in the IRS Publication 526, “Charitable Contributions” and it says on page 7:
Clothing and Household Items
You can’t take a deduction for clothing or
household items you donate unless the clothing
or household items are in good used condition
or better.
Exception. You can take a deduction for a
contribution of an item of clothing or a household
item that isn’t in good used condition or
better if you deduct more than $500 for it and include
a qualified appraisal of it with your return.
Household items. Household items include:
[ul]
[li]Furniture and furnishings,[/li][li]Electronics,[/li][li]Appliances,[/li][li]Linens, and[/li][li]Other similar items[/li][li]Household items don’t include:[/li][li]Food,[/li][li]Paintings, antiques, and other objects of[/li][li]art,[/li][li]Jewelry and gems, and[/li][li]Collections.[/li][/ul]
I take this to mean, a dinning room set with six chairs, each chair is “an item”? The table is “an item” too? And since each has a value of under $500.00, it doesn’t need an appraisal?
If the charity accepted the donation and gave you paperwork to document the value, then you can assume the items are in “good used condition or better” and none of this applies to you.
I think they are trying to prevent people from taking things that should really go in the garbage and dumping them in a Goodwill bin and taking a deduction.
If you donate under $500 in non-cash items, the IRS generally accepts your word for it. An accounting for it might be needed if you get audited, of course, but they don’t ask for what you donated.
If you donate over $500, you need to provide descriptions on form 8283. You can’t just say “household goods,” but I doubt they would get mad if you consider a dining room set to be one item. The description in the OP is a convoluted description of a result of that. Presumably you could donate a damaged Renaissance painting
I took the question to be more about the deductibility of goods that are not in “good or better” condition, since that was the specific IRS information quoted in the OP. He did not seem to be asking about the treatment in general of donations over $500. If the OP’s goods are not in at least good condition but valued over $500 then he can deduct it if he includes a qualified appraisal. So if the condition is *not *good, it would be in his interests to treat the entire set as one item that is valued at over $500 and provide a qualified appraisal. If the condition is good, then it’s a moot point.
Not every organization does this but some do. I have made non-cash donations to a local support house for at-risk children and in every case they provide a receipt with the stated value of the donated goods. I also donated a car to a local school and they provided the tax paperwork included an appraised value.
We always get confused whether if it’s $500 total per year, or $500 total per item. We do lots of deductions to Goodwill and other locations and usually limit what we claim to $500 total, even though we have receipts for more than that. Should we go higher? Doesn’t that mean another form?
This is how I took it. Something donated may have significant value even if it isn’t considered to be in good condition and there is a $500 threshold for “less than good” items.
Both. If you go over $500 per item, you need to get it appraised to prove that it’s really worth that. If you go over $500 for the year, you have to fill out another form.
I assume that items appraised over $500 don’t have to be in good used condition because obviously there’s something about them that’s valuable. If you donate a Ming vase that’s reasonably appraised at $2.7 million, then it doesn’t matter what condition it was in.
An appraisal is not required for a $500+ item, except for motor vehicles, unless you have more than $5,000 in that asset category.
But even with 5,000+ in a category, you can avoid the appraisal requirement if you claim no more than $500 per item.
Form 8283 is required if total donations are valued over $500, regardless of individual item values.
A separate 8283 is required for each asset or asset class over $5,000, and in that case you must attach an itemized statement and, if necessary, the appraisal.
I would take a fairly broad reading of per item but of course you are claiming the FMV of the item. A dining set with six matching chairs has a higher FMV than one table and six unmatched chairs. If you’re going to report them as separate items, my feeling is that you should value them as separate items as well. But I wouldn’t put that on a return without checking the interpretations taken in Tax Court.
The IRS generally will not accept an appraisal by the donee (they’re considered an interested party). An organization may state on the receipt what YOU told them the goods are worth, but it’s not THEIR appraisal (or if it is, don’t count on being able to use it if you’re audited). See the section on excluded individuals in IRS publication 561.
That’s a good question. I use a subscription-based tool that runs about $300/year and that consolidates all kinds of tax-related information together.
It is all public domain information, I’m just not sure how user-friendly the options are. The Tax Court website has a search feature for opinions here: http://ustaxcourt.gov/UstcInOp/OpinionSearch.aspx