August
2009
How You Can Donate to Charity without Spending Money
If you donate a property to a qualified organization, the first question is how to decide the value of the donation. IRS says the fair market value at the time of the donation is usually the basis for deciding the value. You can donate to charity without spending money.
You cannot claim a deduction for donating clothing or household items unless they are in good condition. Household items may be furniture, furnishings, electronics, appliances, linens. Food, paintings, jewelry and gems and other collectibles cannot be considered as household items. If you are claiming a deduction for contributing an item of clothing or household item of the value of to $500, you can do so without much paperwork. Just keep the proof of purchase. If you want to claim deduction for a value of more than $500, you need to attach a qualified appraisal with your return. There are no norms for valuation of used clothes. However the fair market value of such used clothes or personal items is normally much less than the price you paid for them.
You can donate cars, boats or even airplanes to charitable organizations. However, if you are claiming a deduction of more than $500, you should have paperwork for the fair market value of the vehicle on the date of such donation. You must also attach to your return a copy of Form 1098-C which you have to receive from the organization. Remember, you cannot claim the deduction without attaching this form.
If the charitable organization sells the vehicle to a needy individual at a price well below the market value, you can deduct the fair market value of the vehicle at the time of making such contribution. Let us take an example. If you bought a used car for $10,000 two years ago and now you donate it to a charitable organization, you should refer to the used car guide for finding the fair market value of the car. If the fair market value is $6000, you can claim a deduction of that amount. However if the organization to whom you have donated this car gives a Form 1098-C showing that the car was sold for only $3000, you can claim deduction of only $3000.
If you donate a boat, the valuation should be based on an appraisal by a marine surveyor. For cars, you can use trade publications or car pricing guides commonly called ‘blue books’. They are not official publications but they can provide clues for a proper appraisal.
