By the Numbers: 23 million
2008's noncash donation claims
Sunday, March 06, 2011
My mother recently moved to the Austin area. So for the last couple of months, I've been indulging my inner interior designer, helping her furnish her new place.
Since Mom's a frugal sort, we've been shopping consignment and thrift shops. As in any retail establishment, there are bargains on really nice furnishings and there's stuff the shop owners can't give away.
Sorting through all these second-hand items got me thinking about the folks who used to own the property. And that prompted this week's By the Numbers figure:
That's the number of 2008 tax returns (the latest tax year for which the IRS has complete filing data) on which "other than cash" charitable contributions were claimed.
Donation dropoff: That was a dramatic drop from the claims on the previous tax year's Schedule A filings.
In 2007, noncash donations were claimed on almost 24 million returns and totaled almost $59 billion.
There's no way for the IRS to know or reflect in its annual Statistics of Income reports why the numbers change, but we can speculate. My take is that the 2008 tax year drop in charitable donations, in raw numbers and dollar amounts for both cash and noncash varieties, was due to the economy.
That year economists made it official what we already knew: The United States was mired in a recession.
It will be interesting to see as the economy picks up just how the charitable donation figures change. As people get back to work and start buying new stuff, many of their old belongings probably will end up in thrift shops.
And a lot of those donations will show up as future charitable tax deduction claims.
Give away good stuff: If you give away some stuff you no longer need or want, be sure to follow the IRS donation deduction rules.
Your donated household goods must be in good or better shape for you to claim them as an itemized deduction. The question I always get is, "how will the IRS know?" Good point. There's really no way for a tax examiner to determine or check the condition of your donated items.
However, I've noticed that nonprofit organizations that accept donated property are not shy about telling you that they don't want your crap, especially when it is indeed crappy.
Good for those groups.
And shame on anyone who tries to use charitable groups as a dumping ground.
Why bother to cheat on your taxes by claiming an inflated value for a donated old sofa or those jeans you haven't been able to fit into for years? Just cheat all the way. Don't try to palm worthless stuff off on a charity and them claim it. Throw the ratty things away and simply claim the nonexistent donations.
OK. I don't mean that. You should never cheat on your taxes, either flat-out or by overvaluing your donations.
But you get my point. Don't try to make the charity an accomplice to your tax deduction fudging.
Properly valuing noncash donations: So how much can you claim for donated goods? The general rule is that you can claim the fair market value. This is what a willing buyer would pay for the item if you were selling it.
There are computer programs, such as Intuit's ItsDeductible, that can help you come up with the value, as well as smartphone tax apps designed to deal with deductions.
IRS Publication 526 on charitable contributions has a section on determining fair market value of donated goods. There's also IRS Publicaton 561, which it dedicated to the issue of determining the value of donated property.
The Salvation Army has a valuation guide that offers you a range of price tags to put on your donated goods.
You also can check eBay and other auction sites, as well as visit local garage sales.
And you can do what my mother and I have been doing for the last several weeks. thrift shops, particularly those run by nonprofits, and see what the prices are on the items they have in stock.
Not only is searching for a bargain in second-hand stores good tax homework, it's fun!
- Tax rules on charitable donations
- A closer look at charitable giving
- Deductions demand documentation
- Keep the giving going
- Midyear tax tip #8: Get charitable
- Year-end giving moves, December 2010
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