Donations to Dollars: There's an App for That!
Questions and answers about donating household items to charitable organizations
Your old toaster, the clothes your child outgrew this year, some books and home décor – it’s been sitting around in your closet or your garage for a while now, and you’re ready for it to go! If you’re like me, maybe you imagined having a big garage sale, but don’t have the time or energy for that. You don’t want to add to the landfill, and charity is important to you, so you load up the car and head to your local Goodwill. They hand you a receipt and you throw it in your tax file and forget about it until next year. Your CPA sees it and asks you the value your items. You don’t remember! Or maybe you remember the item(s) but have no idea what it's worth. Let’s talk about it!
What can, and should, I donate to a charity like Goodwill?
Clothing, household items, electronics, tools, kitchenware, small appliances, furniture, and lots of other things! The important thing to keep in mind is that everything should be in decent working condition. Do not donate items that are broken, ripped, dirty, missing pieces, or otherwise unusable. Baby items, such as car seats, cribs, strollers, and other equipment, have strict safety regulations, so they are best to avoid unless the charity has specifically asked for them. Also avoid cosmetics and other toiletries, and easily outdated items like encyclopedias and textbooks. Is your donation something you would consider buying if you saw it on the shelf at the thrift store? Be intentional about donating items so that your gift is a blessing to the organization and not a burden.
Do I need a receipt?
If you want to take a tax deduction you will need a receipt from the charitable organization. The receipt should include the organization’s name, the donor’s name, the date of the contribution, a description of the non-cash items donated, and a statement that confirms no goods or services were provided by the organization in return for the contribution.
How do I keep track of my donations?
When you donate items to charity, it’s up to you to track and value your donations. Many charitable organizations don’t list the items themselves, but instead provide space on the receipt for the donor to record the items. The best way to track your donation is to make a specific list of each item and the condition as you gather them for donation. One idea is to use voice dictation on your phone to make the list as you place the items in a box or bag. When the list is complete, either print or email it to yourself. Staple the list to the receipt from the organization. Another idea is to use an app like ItsDeductible to easily track your donations by date, charity, and item.
How do I decide the value of each item?
You can deduct the Fair Market Value of each item you donate. This means what someone might pay for the item if they purchased it in its current condition at a garage sale or thrift store. You can research to find similar items that have been sold in your area or check thrift stores to see current pricing. You can also find lists put out by charitable organizations like the Salvation Army. This can be time-consuming and quite honestly, a lot of work!
The easiest way to value your items is to use an app like ItsDeductible. This will allow you to notate each item and its condition while the app provides up-to-date values. Once you enter the quantity of the item, the app calculates the total value and adds it to your total donation. From there you can print or email your donation if you desire.
Do I really need to do all this record-keeping?
The short answer is: it depends. If you itemize deductions on your tax return, YES! If you take the standard deduction, NO. Talk to your CPA to determine which is right for you.
If you have questions about tax efficiency or how you can maximize your generosity while receiving the best possible deduction, give us a call! We can help you create a charitable giving strategy and increase your impact. Check out our Charitable Giving Playbook for more information.
