How to Value Donations to Goodwill for Tax Deductions
Donating to Goodwill can qualify for a tax deduction if you itemize your deductions on IRS Form 1040 Schedule A. To claim a deduction, you must determine the fair market value (FMV) of your donated items. Here’s how to value your donations correctly:
1. Understand Fair Market Value (FMV)
FMV is the price a buyer would pay for the item in its current condition. Goodwill provides valuation guides, but the IRS does not require you to use them.
2. Use Goodwill’s Donation Valuation Guide
Goodwill offers general valuation ranges for common donated items, such as:
- Clothing: $3–$50 per item (higher for designer brands)
- Furniture: $20–$500 depending on condition
- Electronics: $5–$200 (varies by functionality)
- Books: $1–$10 each
Check Goodwill’s official valuation guide for more details.
3. Document Your Donations Properly
- Under $250: A receipt from Goodwill is sufficient.
- $250–$500: You need a written acknowledgment from Goodwill.
- Over $500: Requires IRS Form 8283 (for non-cash donations).
- Over $5,000: A professional appraisal is required.
4. Take Photos & Keep Records
- List each donated item with its estimated FMV.
- Take photos of high-value items (e.g., furniture, jewelry).
- Save receipts and acknowledgment letters.
5. Use Tax Software or Valuation Tools
- TurboTax, H&R Block, and IRS guidelines provide FMV estimates.
- Online tools like ItsDeductible (by TurboTax) help track donations.
6. Avoid Overvaluation Risks
The IRS may audit excessive deductions. Ensure your valuations are reasonable and documented.
For official IRS rules, refer to IRS Publication 561. By following these steps, you can maximize your tax benefits while supporting Goodwill’s mission.