Non-cash donations confusion

[sjabrams]

I am thoroughly confused about how to enter non-cash donations. My husband died in January 2024, and I am itemizing for 2025. I donated hundreds of clothes, footwear, and household items ranging from S hooks to mesh drawstring pouches, toilet bowl cleaning cartridges, flash drives, car cup holder extenders, etc. I made these donations to 3 different charitable thrift shops in 16 different batches on different days, and many of the batches totaled over $500 in FMV. The FMV of individual items are mostly under $20, with a few exceptions for new (still in original packaging or with tags on), high-quality brands, and none of those have an FMV over $50.

1. Does the $500 rule apply to each batch or to all the donations to a single charity?

2. Does the $5,000 rule apply to each batch or to all the donations to a single charity?

3. How, exactly, do I enter these in TurboTax? I entered them in Deductible Duck and imported the TXF file, but TurboTax only took the totals for each batch, labeled each with "Needs Review," and Smart Check is requesting the acquisition date, cost/adjusted basis, etc. on the whole lot  instead of the particular items. I have no idea about even the individual items, since I didn't buy most of them or years have gone by since. Same problem when I click on the Edit icon, though at least there it lets me say I got "the item" over multiple dates.

4. Do I consider items that my husband bought as purchases or inheritance?

Thank you for whatever help you can provide.

[Opus 17 · Accepted solution]

The $500 rule applies to your whole tax return.  If your total of non-cash donations is more than $500 you must enter them in limited detail and report them on form 8283.

You do not need to list individual items, but you do need your own separate written inventory that you can use to determine fair market value.  You can group donations by charity and date.  For example, if you donated used clothing and household items to Goodwill on March 5, that can be entered as a single donation.  You can choose Household Items from the first menu, add the fair market value.  If you are asked how acquired, you can say bought or inherited.  If you are asked for the purchase date, the IRS allows "various" but Turbotax might not, so give a rough estimate.  How the value was determined can be consignment shop values or thrift shop values.

The $5000 rule applies to any single item "or group of similar items."  I have never seen any more specific advice on the IRS web site about what constitutes a "group of similar items."  I suppose that is between you and an auditor.  If you donated used clothing worth $1000 on 6 different days to different charities, that might be seen as one $6000 donation that you split up.  Clothing and used household items and used furniture might arguably be 3 different groups or one group...I just haven't seen a more specific guidance.  Ultimately it is up to you to decide how to file.

I suspect that even if you take the position that your items are different groups and that no single group is more than $5000, Turbotax may enforce the signature and appraisal rules if the total is more than $5000.  You will probably need to print your return and file by mail (no e-filing) and not include the signed forms that Turbotax instructs you to get signed.  

[sjabrams]

Are you saying that the $5,000 rule applies across donation dates and charities? That is, if the total of my non-cash donations of clothing and household items is more than $5,000, I need to fill out Section B of Form 8283, which seems to require an appraisal of the donated property? It never occurred to me to have these low-FMV items appraised, and now, of course, they're gone.

[Opus 17 · Accepted solution]

Please read publication 526.  The IRS says that if you donate a single item or group of similar items valued over $5000, you must have a signed form 8283 and a signed appraisal.   The IRS does not give any further instruction on what "a group of similar items" means, but it does say that you need the signatures even if you donate the items to different charities on different days.   You will have to decide if you donated one group of similar items, or more than one group.  If you decide that all your items were one group of similar items, you have to stop at $4999 since you don't have signatures.  If you decide that your items are in more than one group, and each group is less than $5000, then you will probably need to file by mail, and you will need to keep copies of your documents in case of audit. 

[sjabrams]

Wow. What a way to discourage non-cash donations, if at least some of the point is to get a tax deduction. Since the IRS seems to consider "Clothing and household items" as a single type of property, I don't think I can take a deduction for the full value of what I donated. Getting these items appraised in the future probably won't be worth the cost and the hassle. Thanks for the info, though; better than having to deal with an audit.

[Opus 17]

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@sjabrams wrote:

Wow. What a way to discourage non-cash donations, if at least some of the point is to get a tax deduction. Since the IRS seems to consider "Clothing and household items" as a single type of property, I don't think I can take a deduction for the full value of what I donated. Getting these items appraised in the future probably won't be worth the cost and the hassle. Thanks for the info, though; better than having to deal with an audit.

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It's written into the tax law by Congress.  I suspect they are balancing the idea of deducting donations with the need to increase tax compliance by making sure that large donations are properly valued.   These rules are available online or to ask a tax preparer, but you are certainly not the only person to make a large donation after the death of a loved one and not know about the appraisal rule.