As the end of the year approaches, you may be thinking about clearing out your home and donating some items to charity. The good news is that you may be able to write off some of these non-cash contributions as deductions.
However, it’s important that you carefully consider how you value these items before filing your taxes. You must evaluate them accurately. If you value them too highly, and thus write off too much money, you may run into trouble with the IRS.
Determining Fair Market Value
While there are no set formulas for valuing your non-cash items, the basic rule is that you can only deduct fair market value (not the original price) for the items you donate to charity. This means you need to think honestly about the condition your property is in and how much a buyer would realistically pay for your item. If you need some help determining fair market value, it’s a good idea to do some research before you settle on an amount.
Get Help From a Tax Pro
Because there have been some abuses of charitable deductions in the past, the IRS takes these types of deductions seriously. So, if you want to make sure that you don’t deduct an unfair amount (and inadvertently get yourself into trouble with the IRS), you should seek help from a tax help professional. At Taxation Solutions, Inc., we can help you evaluate your non-cash charitable donations in a way that’s fair but also maximizes your tax savings! Give us a call today.