Non Cash Chartiable Contributions that won't raise any red flags with the IRS

[LeoNYC]

We are a family of 3, sold our old house in 2024 and bought a new one, so donated a lot of clothing, TV, heaters and other household items (I have dozens of receipts from Goodwill and Salvation Army, but they simply list the numeric list of bags of different items).

Also, we sold a lot of mutual funds in order to buy a new home, so our adjusted gross income spiked to 470,000 for 2024 (without that it would be around 220K). Our total mortgage interest is 33K for 2024 (because we had 2 mortgages for some time).

How much can we deduct for charitable contributions without raising any red flags with the IRS, based on your understanding? I see completely different views on this from "It's safe to donate up to 10-15% of your AGI" to "look at the typical donation numbers, which is around 3% of the AGI and keep it without that range".

I also see this answer "if you have the receipts you have nothing to worry about". Except these receipts just say something like: 20 bags of clothing, 12 bags of household items, 10 bags of accessories, 5 bags of miscellaneous. It is kind of up to us to estimate the value of this.

Any thoughts or suggestions?

[Makefile]

One of the features of the higher tiers of desktop software is a deduction optimizer package that includes estimating the value of thrift store donations.

Remember that because of the $10,000 cap on state and local tax deductions, a married couple needs $19,200 in other deductions (charitable contributions plus mortgage interest) to even reach parity with the standard deduction. And your mortgage interest deduction will also be capped if the mortgage is over $750,000.

You can look at Form 8283 to see what you have to report for the amounts you're talking about.

[LeoNYC]

One of the features of the higher tiers of desktop software is a deduction optimizer package that includes estimating the value of thrift store donations.

Remember that because of the $10,000 cap on state and local tax deductions, a married couple needs $19,200 in other deductions (charitable contributions plus mortgage interest) to even reach parity with the standard deduction. And your mortgage interest deduction will also be capped if the mortgage is over $750,000.

You can look at Form 8283 to see what you have to report for the amounts you're talking about.

Understood all of the above. Still, my original question remains. Because it is basically up to us to assess the value of all these non cash donations and obviously the impact is significant whether I put 15K, 20K or 35K

[7eight9]

If you follow Goodwill's valuation guidelines at least you won't be that person whose used skivvies are washed in public (at $2/pair circa 1986 tax return) when you run for higher office.

Valuation Guide for Goodwill Donors -- https://www.goodwill.org/wp-content/upl ... _guide.pdf

[MarkNYC]

... my original question remains. Because it is basically up to us to assess the value of all these non cash donations and obviously the impact is significant whether I put 15K, 20K or 35K

You should have put together an itemized list of items you donated. Perhaps you did that.

So what is your total estimated used fair market value of all the clothing and household goods that you donated? And was there any one item of very high value?  The estimated value might affect how you claim the deduction, and how much can be claimed.

[BigJohn]

Obviously the total needs to be based on actual donations and values at the Goodwill site or other such tools. But, if you’re looking to understand what’s average, go to this IRS website with statistics on donations by type and AGI. You’ll have to wade through a lot of numbers but it will at least give you a feel for what data the IRS has.

https://www.irs.gov/statistics/soi-tax- ... tributions

[bombcar]

List everything and pick a price between “garage sale” and “goodwill”. Add it up. Use that.

Less likely to be audited than a number obviously designed to hit a percentage.

[RetiredAL]

Understood all of the above. Still, my original question remains. Because it is basically up to us to assess the value of all these non cash donations and obviously the impact is significant whether I put 15K, 20K or 35K

I few years back, a property of my Dad's was given to the very small community my Mom grew up in, so that they could build a new community center building. It was a 501C3 contribution appraised at $50K. This exceeded the yearly limit, so it showed for 2 years on his 1040. As we did his taxes the first year, I asked his tax CPA if that amount would raise a flag, and he said "nop, now if it was $500K with his income, maybe". The IRS never said a peep.

[Saving$]

Years ago I inherited the contents of a house, so I had ALOT of donations.

I donated in groups - books, clothing shirts, clothing sweaters, clothing pants, etc. and took a count and photograps of the donated items. The photos were usually taken in the recipient organization's parking lot, with their sign in the background and the trunk open with the donations in the foreground. I still use this method of documentation.

At tax time, I used the tax software's built in valuation features. Today I use H&R Block, and in the Deductions section, under Used Clothes and Household Goods, is the option to use "Deduction Pro." Once that opens, you select your item, quantity, and condition, and it assigns the value.

Back when I inherited the house content, I used TaxAct (before their pricing went crazy) and they offered a feature similar to Deduction Pro. Their software also had some sort of "audit alert feature" that popped up as I approached $5,000 warning me that donations of over $5k in household goods could trigger an audit. As it turned out the value of the goods I donated was just below that, per the values assigned in their version of Deduction Pro. I used H&R Block's Deduction Pro last year and was so uncomfortable with the high value it assigned to things that I revised everything down to "average wear" even if things were "new" or "Like new."

So perhaps keeping the total value of donated household good below $5k makes you less prone to audit, or perhaps that threshold has risen with inflation, as this was over 10-15 years ago.

[SWYK]

$5000 can trigger an audit because this amount typically requires a taxpayer to obtain an appraisal….which is unlikely to even happen for bags of used clothing. I recommend looking at the instructions to IRS Form 8283 Section B and tread cautiously.

[cisvp]

I thought donations over $5000 require an appraisal. Did you get one?

[AnEngineer]

Understood all of the above. Still, my original question remains. Because it is basically up to us to assess the value of all these non cash donations and obviously the impact is significant whether I put 15K, 20K or 35K

The way you're thinking about it sounds like you're trying to skirt enforcement (not saying that's what you're actually doing!) as opposed to figuring out what you can deduct. You just add up the individual things. There's no threshold under which you can stay and use as a defense against the IRS. If they come asking, you have to justify each deduction. If they don't, you should still be able to.

[rkhusky]

I thought donations over $5000 require an appraisal. Did you get one?

That is for a single item or a group of similar items, like a coin collection or bag of clothes, not for the whole donation.

[White Coat Investor]

We are a family of 3, sold our old house in 2024 and bought a new one, so donated a lot of clothing, TV, heaters and other household items (I have dozens of receipts from Goodwill and Salvation Army, but they simply list the numeric list of bags of different items).

Also, we sold a lot of mutual funds in order to buy a new home, so our adjusted gross income spiked to 470,000 for 2024 (without that it would be around 220K). Our total mortgage interest is 33K for 2024 (because we had 2 mortgages for some time).

How much can we deduct for charitable contributions without raising any red flags with the IRS, based on your understanding? I see completely different views on this from "It's safe to donate up to 10-15% of your AGI" to "look at the typical donation numbers, which is around 3% of the AGI and keep it without that range".

I also see this answer "if you have the receipts you have nothing to worry about". Except these receipts just say something like: 20 bags of clothing, 12 bags of household items, 10 bags of accessories, 5 bags of miscellaneous. It is kind of up to us to estimate the value of this.

Any thoughts or suggestions?

I feel for you. It's a pain to itemize every little thing you give to Goodwill or whatever when you really just want it out of your house. But if you want to claim a deduction for it, that's what you have to do. We end up just not claiming those deductions sometimes because we don't have time to itemize them in ItsDeductible or similar.

[RickBoglehead]

After the fact it's near impossible. You can't just make numbers up, which seems to be what you are asking.

When we donate items, we make a list in Excel of all the items. We take pictures - of some items detailed pictures, of other items maybe a dozen on the floor together.

Valuation rules are quite clear, https://www.irs.gov/publications/p561 For used clothing, the price in the consignment shop is the driver.

We inherited a house full of stuff in 2013 (actual inheritance was in 2017, but we got possession in 2013). We've been selling on Craigslist, and then also Facebook for a decade (we have a big basement). You will get a lot more money (magnitudes more) this way, but it's work.

Since it seems like you didn't note any of the contents of what you donated, you're basically hosed. "A bag of used clothing" is worth next to nothing.

[neurosphere]

One of my favorite IRS audits is related to Goodwill donations: https://casetext.com/case/ohde-v-commr

At trial petitioners produced a spreadsheet generated by the TurboTax "ItsDeductible" program. This spreadsheet listed the types of items petitioners allegedly delivered to Goodwill on each of the trips (e.g., "boy's socks," "coffee cups," or "men's shirts"), the number of items of each type allegedly delivered, and the "quality" of each item. For every one of the 20,000 items, the quality is listed as "high." This spreadsheet was not prepared contemporaneously with the alleged gifts, and petitioners supplied no contemporaneous records to support the entries on this spreadsheet. We did not find petitioners' testimony on these points credible.

[neurosphere]

We are a family of 3, sold our old house in 2024 and bought a new one, so donated a lot of clothing, TV, heaters and other household items (I have dozens of receipts from Goodwill and Salvation Army, but they simply list the numeric list of bags of different items).

If you wish to claim a deduction of $501 or more for "similar" items (e.g. "clothing", "household") you need a description of EACH item, when/how obtained, original price, etc.

If you have a strong belief that each category exceeds that, you might simply list $500 for each category and call it a day. If asked, you could very will justify that "20 bags of clothing" as per the Goodwill notices indeed were worth at least $500.