Taxpayers determine the value of donated goods for tax purposes by assessing their fair market value, which is the price a knowledgeable, willing buyer and seller would exchange on the open market, reports the Internal Revenue Service. Methods of calculating fair market value vary depending on the type of goods taxpayers donate.Continue Reading
When determining the value of donated property, taxpayers must consider factors such as the property's selling price, the value of similar property, the property's replacement cost and the opinion of experts, explains the IRS. Used household items and clothing must be in good condition or better to be eligible as tax deductible property. Taxpayers should value such items at prices consumers would pay for them at thrift shops. Any clothing or household item valued at over $500 needs a qualified appraisal, as of 2015.
Because gems and jewelry are specialized items, taxpayers almost always need to have them appraised, according to the IRS. Antiques, paintings and other artwork need appraisal if the deducted value is over $5,000. Taxpayers can estimate the worth of hobby collections of stamps, coins, books and other items using catalogs and other reference material if the collections have modest value.
For donations of vehicles worth $500 or less, taxpayers can estimate the fair market value using a used vehicle pricing guide, states Nolo. For vehicles worth more than $500, taxpayers must declare the donation value equal to the amount the charity receives for the sale of the vehicle. If the charity uses the vehicle or gives it away, the taxpayer can deduct its estimated fair market value.Learn more about Taxes