topic Re: Charitable deduction: method used to determine value? in Get your taxes done using TurboTax

Charitable deduction: method used to determine value?

roscoedillon — Wed, 29 Jan 2025 08:31:00 GMT

We've been cleaning out our closets and donating old items to local goodwill charities, etc. They don't estimate the value at the donation drop-off, it's up to us to fill that out. TT asks the method used to determine value. I've no clue what to select. I would think Thrift Shop Value but TT provides no guidance nor does the IRS.

Re: Charitable deduction: method used to determine value?

MindyB — Wed, 29 Jan 2025 14:49:08 GMT

Yes, thrift shop value sounds like a good choice based on the items you are donating. You should do your best to estimate the fair market value (fmv) of the items, and since they are going to a thrift shop, thrift shop value suits your circumstance well.

Here is an article that you may find helpful: How do I determine the value of donated items?

Re: Charitable deduction: method used to determine value?

Opus 17 — Wed, 29 Jan 2025 14:45:13 GMT

If audited, you must have some reasonable method to determine the fair market value of the item, that you can show the auditor. Thrift shop value may be the easiest (whatever the thrift shop will charge) but it is not mandatory. In fact, you can claim fair market value for an item even if you know the thrift shop will sell it for less; for example, I donated a Bose radio that sells on eBay for $100, knowing the thrift shop would probably charge $10 or $20 (and some scavenger probably would snap it up and put it on eBay for a profit). I didn't want to deal with the hassle of making an account on eBay, listing it, shipping it, and so on. But I am entitled to the fair market value as a tax deduction, as long as I can prove it. Likewise, I donated a piece of furniture to Goodwill that I could sell on Facebook Marketplace for $50, because I didn't want to deal with the hassle of selling it myself. I can claim the FMV even if Goodwill will charge less.

So it's really up to you, what amount of research you want to do, what kind of proof you want to document and save with your tax papers for 3 years in case of audit. If the easiest thing is to walk through the store, noting the prices they charge for similar items, and that seems like a fair indication of value, then use that method. But you can use other methods if they are more appropriate for particular items.

Re: Charitable deduction: method used to determine value?

roscoedillon — Thu, 30 Jan 2025 00:06:33 GMT

Problem is "Fair Market Value" is not listed as one of the options even though the IRS uses that term frequently.

Re: Charitable deduction: method used to determine value?

Opus 17 — Thu, 30 Jan 2025 13:20:42 GMT

@roscoedillon wrote:

Problem is "Fair Market Value" is not listed as one of the options even though the IRS uses that term frequently.

All the methods listed are ways of determining the fair market value. It's not enough to say that you know what the FMV is, you have to be able to say how you know that (thrift store prices, eBay prices, appraisal, etc.).

Re: Charitable deduction: method used to determine value?

roscoedillon — Fri, 31 Jan 2025 01:18:16 GMT

I get that, but the available options are not explained by TT or by the IRS. Both keep harping on FMV. Enough to drive one mad...