< Back

Ask Jean: Tax Deductions for Donated Property

iStock_000010084105XSmallEnjoy your segments on the Today Show — wish they could be longer. I’m looking for information on how much tax deduction I realize for donating an item. I have a couple of instruments that could be donated to organizations who will put them into the hands of kids who wouldn’t otherwise have the opportunity to make music, but wondering if donating will be a huge loss or if I should continue to try and sell them.
— sheepdog55

When you’re donating an item or piece of property – rather than cash – you have to get at its fair market value, that is, what the item would sell for on the open market. That’s the amount that the IRS will allow you to claim as a deduction on your tax return. In most cases, it’s going to be a lot less than what you paid for it, because the item is now used. The best way to figure out the fair market value is through comparables – look for similar used items online or in thrift stores. (Note: The Salvation Army maintains a comprehensive list of the fair market value of many items on its website. It doesn’t include instruments, but this is a great resource for future reference.)

But you have a leg up here, because it sounds like you’ve already tried to sell these instruments, so I bet you’ve done at least a little research into how much they might sell for, which gives you a good idea of their fair market value. A couple more things you need to know: Always ask for a reciept. If the deduction for an item – or a group of similar items, which would apply here – is more than $5,000, you have to get an appraisal. And if the total of all your noncash contributions – these instruments and anything else you decide to donate and write off, like clothing to the Salvation Army – is more than $500, you have to attach IRS Form 8283 to your return.

Finally, if you have additional questions, I’d give the this IRS publication a read. It’s surprisingly accessible and easy to understand.