Fair Market Value
In order to determine the amount of the deduction you are allowed to claim for a donation to Goodwill, you must first determine the "fair market value" of the donated items. According to the IRS, this means that you may deduct the amount that the item could reasonably be sold for on the market. Goodwill has a valuation guide that may be helpful (see link in Resources), but ultimately it is you, the donor, who must determine the value, and not the employees of Goodwill.
The IRS is not going to take your word that you donated items to Goodwill. You must have documentation, which, in this case, means a detailed receipt. A Goodwill employee will offer you a receipt for the donation, which you should accept if you are planning on deducting its value. This will be an itemized form that you will fill in with fair market values. Goodwill recommends being as specific as possible in the description of each item, taking into account age, condition and quality, so you may further assess the true value of the donation with an accountant during tax season.
Goodwill cannot accept every item that you want to get rid of as a donation. In fact, they have an extensive "no, thank you" list of items such as air conditioners, carpeting, lawn mowers and firearms, which they are not allowed to take and resell. If Goodwill refuses a donated item, you are not allowed to deduct its value.
Schedule A Form
If the total of the donated items amounts to less than $500, you are allowed to claim the entire deduction on a portion of the Schedule A form as a "Miscellaneous Exemption," according to the IRS. All donations filed under "Miscellaneous" are subject to the 2 percent rule, which states that deductions for such contributions may only amount to 2 percent of the gross adjusted income.
If the contribution amounts to more than $500, you will need to file anything beyond that first $500 on a separate Form 8283, which is a form specifically for noncash contributions. And if you happen to donate materials worth more than $5,000, you will need to have the items appraised and certified by a professional appraiser.
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