Tax Rules for Charitable Contributions of Noncash Items

We often find people get confused about the tax laws regarding contributions to charities, including churches.  First a
short note – the contributions are only deductible if they are made to a charitable organization.  They are NOT deductible if
they are made to a family in need and not given through a charity.  In other words, give money or property to someone
because they have a need and you want to give – but don’t expect an income tax deduction unless the money or property
is being given to a charity.

Below we’ve tried to cover the general rules dealing with contributions of noncash items in simple language.

1) Starting way back in August of 2006, any single contributed item of clothing and household items must be in at least
“good” condition.

2) Any contributions of noncash items totaling $250 or more AT ONE TIME must be supported by a receipt from the
organization.

3) If the total contributions of noncash items comes to $500 or less in a YEAR, the deduction is a single entry on the
Schedule A, Itemized Deductions.

4) Any contributions of noncash items of more than $500 for a YEAR requires a separate form as part of your tax return.  
This form needs to have the name and address of the organization, the date of the contribution, the value of the
contribution, and what basis you used to value the contribution (such as a thrift shop).

5) If there are any noncash items contributed which have a total value of more than $500 AT ONE TIME, the separate form
mentioned in 4) above also asks how you acquired the property (such as “purchased”), when you acquired the property,
and how much you paid for the property.

6) If the total contributions of noncash items of one type (“clothing” is a different type from “household goods”) come to
more than $5,000 during the year, a formal appraisal is also required to be attached to the tax return.

7) Contributions of vehicles worth more than $500 require another form that will be received from the charity stating what
the vehicle was sold for.  This sales price is the amount of your deduction.  A copy of this form is required to be filed with
your tax return.  If the charity is using the vehicle instead of selling it, it is required to notify you of this by letter which you
should keep in your files.

David & Mary Mellem