Goodwill® is an IRS-approved 501(c)(3) nonprofit organization.
Items must be in good condition or better in order to claim a tax deduction. Donating vehicles, clothing, housewares and furniture to Goodwill Industries helps us help people with disabilities and disadvantages get jobs. If you itemize, it’s also an easy way to get a tax deduction because Goodwill is an IRS-approved 501(c)(3) nonprofit organization (Federal Tax ID: 53-0196588).
But before you donate, there are some important things you need to know. Per IRS Publication 561, all nonprofit organizations are prohibited from assigning values to material donations. That means it’s the donor’s responsibility to determine the item’s fair market value.
Here are some tips to make your tax preparation easier:
- First and foremost, do your homework and always consult a tax accountant if you have questions about your claim. The fair market value of a donated shirt, for example, is far different than a used automobile. If you bought a shirt new for $40 a decade ago, then donated it to Goodwill and we resold it for $3.99, then its fair market value for tax purposes is $3.99, not $40. Classified ads from local newspapers for similar merchandise are excellent resources to help determine fair market values, as well as simply walking through the Goodwill store with a notepad and jotting down prices.
- If you believe the value of your donation is over $5,000, and if you plan to claim a charitable tax deduction for your donation, you may need to have Goodwill complete certain tax forms to be able to claim a charitable deduction. Before making a donation of that value, please call Goodwill at (202) 636-4225.
- If any single item of clothing or single household item that you are donating is not in good condition and you plan to claim a deduction of more than $500 for that single item, you may need an appraisal for that item.
- If you donate a vehicle or boat, in general, the amount you can deduct from your taxes is the price your vehicle or boat sold for at Goodwill’s auto auction. Following the sale of your vehicle or boat at the Goodwill auto auction, you will receive a letter with the sale information for your tax records.
- Only taxpayers who itemize (use the long form) can deduct charitable donations. People who itemize are typically homeowners who are deducting a portion of their mortgage interest.
- You cannot deduct charitable donations using the short form–there’s no place for it.
- If you don’t normally itemize but made a sizable charity donation, the donation must be greater than the standard deduction.
Determining Used Goods Donation Value
- When you drop off your donations at Goodwill, you’ll receive a receipt from a donation attendant. Hang on to this receipt – at the end of the year, you can claim a tax deduction for clothing and household items that are in good condition.
- The U.S. Internal Revenue Service (IRS) requires you to value your donation when filing your return. Get started with our donation valuation guide, which features estimates for the most commonly donated items.
- Want to manage your donation records electronically? Goodwill has partnered with CharityDeductions.com to help you keep track of your donated items and their value throughout the year. Get started for free today and enter the promo code goodwill to save 20 percent off of a paid membership.
More IRS guidelines for charitable contributions can be found at www.irs.gov or call toll-free at 1-800-829-1040.
The information contained on this website does not constitute legal advice or tax advice. Its authors make no claims about its accuracy, completeness, or up-to-date character. The material on this website is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding U.S. federal tax-related penalties, or (ii) promoting, marketing or recommending to another party any tax-related matter addressed herein.