| If you donate a property to a qualified | | | | 1098–C showing that the car was sold for |
| organization, the first question is how to decide | | | | only $3000, you can claim deduction of only |
| the value of the donation. IRS says the fair | | | | $3000. |
| market value at the time of the donation is | | | | If you donate a boat, the valuation should be |
| usually the basis for deciding the value. | | | | based on an appraisal by a marine surveyor. For |
| Donating household items: | | | | cars, you can use trade publications or car pricing |
| You cannot claim a deduction for donating clothing | | | | guides commonly called ‘blue books’. |
| or household items unless they are in good | | | | They are not official publications but they can |
| condition. Household items may be furniture, | | | | provide clues for a proper appraisal. |
| furnishings, electronics, appliances, linens. Food, | | | | Donating taxidermy property |
| paintings, jewelry and gems and other collectibles | | | | If you donate taxidermy property to a qualified |
| cannot be considered as household items. If you | | | | organization, your deduction will be the basis in the |
| are claiming a deduction for contributing an item | | | | property or its fair market value whichever is |
| of clothing or household item of the value of to | | | | less. The basis for this purpose includes only the |
| $500, you can do so without much paperwork. | | | | cost of preparing, stuffing and mounting the |
| Just keep the proof of purchase. If you want to | | | | property. The basis does not include |
| claim deduction for a value of more than $500, | | | | transportation or travel costs. It also does not |
| you need to attach a qualified appraisal with your | | | | include cost of hunting or killing an animal and the |
| return. There are no norms for valuation of | | | | cost of preparing animal for taxidermy. |
| used clothes. However the fair market value of | | | | Usually, you cannot claim a deduction for |
| such used clothes or personal items is normally | | | | charitable contribution of less than your entire |
| much less than the price you paid for them. | | | | interest in the property. So if you want to |
| Donating a vehicle | | | | donate a right to use the property, which is |
| You can donate cars, boats or even airplanes to | | | | obviously less than your entire interest in that |
| charitable organizations. However, if you are | | | | property, you cannot claim such donation for a |
| claiming a deduction of more than $500, you | | | | deduction. So if you own a building and wanted |
| should have paperwork for the fair market value | | | | to donate rent-free use of one floor of it to a |
| of the vehicle on the date of such donation. You | | | | charitable organization, you cannot claim any |
| must also attach to your return a copy of Form | | | | deduction as you are donating a partial interest. |
| 1098-C which you have to receive from the | | | | If you donate a property with its fair market |
| organization. Remember, you cannot claim the | | | | value less than your basis, you can claim |
| deduction without attaching this form. | | | | deduction only of the fair market value. |
| If the charitable organization sells the vehicle to a | | | | Mind the severe penalties |
| needy individual at a price well below the market | | | | If you overstate the value or adjusted basis of |
| value, you can deduct the fair market value of | | | | donated property, IRS can levy a penalty of 20 |
| the vehicle at the time of making such | | | | per cent of the amount by which you underpaid |
| contribution. Let us take an example. If you | | | | your tax. However if you have underpaid your |
| bought a used car for $10,000 two years ago and | | | | tax by more than $5000 or the value of the |
| now you donate it to a charitable organization, | | | | property claimed in your return is 200% more |
| you should refer to the used car guide for finding | | | | than the correct amount, you are subject to 40 |
| the fair market value of the car. If the fair | | | | per cent penalty. |
| market value is $6000, you can claim a deduction | | | | So ensure that you should not pay penalties for |
| of that amount. However if the organization to | | | | donating! |
| whom you have donated this car gives a Form | | | | |