Tax Guidelines for Donated Furniture
Donating furniture not only helps you fill a need in your community, it might give you a break on your taxes. While deducting donations requires that you itemize your deductions, the extra work preparing your tax forms can pay off big, depending on the amount of furniture you give away. Making the most of your donations requires strict adherence to the Internal Revenue Service's guidelines for donated property.
You cannot deduct furniture you give to your children or friends. The IRS only allows deductions for furniture given to an approved nonprofit organization. If you are unsure about the tax-exempt status of the organization to which you are donating the furniture, the IRS maintains a database of approved organizations on its Exempt Organizations Select Check webpage (see Resources). Donations to church organizations and government units such as Indian tribal governments are typically deductible whether they have official nonprofit status or not. If a local or regional organization is a unit of a national organization, its exempt status is determined by the status of the main organization. For example, you can deduct the value of a chair given to your local scouting group because the national organization is tax-exempt.
The IRS does not allow you to set the value of your donation arbitrarily. For instance, you can only deduct an item that is in good, usable condition or better and you must use the item's fair market value to determine your deduction. According to the IRS, consider the furniture's worth on the open market. You must factor in the furniture's condition, desirability and scarcity when determining its value. You cannot deduct a single-item donation that is in poor or unusable condition, unless its value is more than $500 and you have a qualified appraisal of the item. If you claim that a single item — or group of similar items donated to a single charity — is worth more than $5,000, you must receive a qualified appraisal of the item(s) regardless of its condition before the IRS will accept the deduction. Contributions valued between $500 and $5,000 require that you inform the IRS when and where you got the donated item using columns "d" through "f" of Part I on Form 8283.
Meeting the requirements for a qualified appraisal means having the item inspected by an appraiser that belongs to an appraisal organization or by someone certified or licensed for appraising furniture in your state. The IRS also accepts appraisals from individuals that regularly receive pay for performing appraisals of furniture. The appraiser must sign Part III of Form 8283 that you must include with your tax filing if you are claiming a donation of $500 or more.
Regardless of the deduction amount you are claiming, the IRS requires that you have a receipt showing the furniture's value with the charity's name on it. The Salvation Army provides a list showing furniture valuation based on condition. For example, it shows the lowest value of a single bed as $35 and its highest value as $100. The Salvation Army will value the bed somewhere between the two amounts based on its condition.
The IRS places limits on your deductible amounts based on your adjusted gross income and the type of organization receiving your donation. You can never claim more than 50 percent of your AGI, regardless of the organization's type. Donations to churches, hospitals, publicly supported charities and educational organizations are all at the 50 percent level. If your donation goes to a fraternal society, cemetery fund or veterans' organization, the IRS limits your deductible amount to 30 percent. For example, if your AGI is $30,000 you can deduct donations up to $15,000 if your donations go to a church. However, if the donation goes to a veterans' organization, you can only deduct $9,000. You can carry unused amounts over to your next filing year.
Specializing in business and finance, Lee Nichols began writing in 2002. Nichols holds a Bachelor of Arts in Web and Graphic Design and a Bachelor of Science in Business Administration from the University of Mississippi.