If you donate property to a qualified organization, the first question is how to decide the value of the donation. The IRS says that the fair market value at the time of the donation is usually the basis for deciding the value.

Donation of household items:

You cannot claim a deduction for donating clothing or household items unless they are in good condition. Household items can be furniture, household items, electronics, appliances, bedding. Food, paintings, jewelry and gems, and other collectibles cannot be considered household items. If you’re claiming a deduction for contributing up to $500 worth of clothing or household items, you can do so without a lot of paperwork. Just keep your proof of purchase. If you want to claim a deduction for more than $500, you must attach a qualified appraisal with your return. There are no standards for the valuation of used clothing. However, the fair market value of such used clothing or personal items is usually much less than the price you paid for them.

donate a vehicle

You can donate cars, boats, or even planes to charity. However, if you claim a deduction of more than $500, you must have documentation of the vehicle’s fair market value on the date of such donation. You should also attach to your return a copy of the Form 1098-C that you should receive from the organization. Remember, you cannot claim the deduction without attaching this form.

If the charity sells the vehicle to a person in need at a price well below market value, the charity may deduct the fair market value of the vehicle at the time of making that contribution. Let’s take an example. If you bought a used car for $10,000 two years ago and are now donating it to charity, you should check the used car guide to find the fair market value of the car. If the fair market value is $6,000, you can claim a deduction from that amount. However, if the organization to which you have donated this car submits a 1098-C form showing that the car sold for only $3,000, you can claim a deduction of only $3,000.

If you donate a boat, the valuation must be based on an appraisal by a marine surveyor. For cars, you can use trade publications or car price guides commonly called “blue books.” They are not official publications but they can give clues for a correct assessment.

Taxidermy Property Donation

If you donate taxidermy property to a qualified organization, your deduction will be the property’s basis or its fair market value, whichever is less. The basis for this purpose includes only the cost of preparation, backfill and erection of the property. The base does not include transportation or travel expenses. It also does not include the cost of hunting or killing an animal and the cost of preparing the animal for taxidermy.

Generally, you cannot claim a charitable contribution deduction for less than your total interest in the property. So if you want to donate a right to use the property, which is obviously less than your total interest in that property, you can’t claim that gift for a deduction. So, if you own a building and want to donate the free use of a flat to charity, you can’t claim any deductions since you’re donating partial interest.

If you donate property with its FMV below its basis, you can claim the FMV deduction only.

Beware of harsh penalties

If you overstate the value or adjusted basis of the donated property, the IRS may impose a penalty of 20 percent of the amount for which you underpaid your taxes. However, if you have underpaid your tax by more than $5,000 or the value of the property claimed on your return is 200% more than the correct amount, you are subject to a 40 percent penalty.

So make sure you don’t pay penalties for donating!