Goodwill Information for Tax Returns

Merchandise Donations

Take note of the condition of the clothing and household items you want to donate, because Goodwill Industries warns its donors that federal law allows tax deductions for donated items that are in good or better condition. You will need a receipt for your records that shows you donated to the organization if the value of your items ranges from $250 to $500. The Internal Revenue Service requires taxpayers to file Form 8283 with their returns if they donate belongings that are worth more than $500.

You must place a fair market value on the items you donate to deduct them on your tax return. Goodwill Industries and other organizations provide online valuation guides to help with the process. For example, Goodwill lists the price range for a woman's two-piece suit at $5 to $30, and a man's coat is valued at $7 to $40. The IRS defines the fair market value as the price at which people would buy and sell an item if they had reasonable knowledge of the value and condition of it. You don't have to include your list of donated items with your return, but you must enter your total contribution amount on line 17 of the "Schedule A" tax form.

Different rules apply to cash and vehicle donations, and they're listed in IRS publication 526. For example, you must have a receipt or other documentation to claim a deduction for a single cash donation of $250 or more. Goodwill Industries accepts donations of vehicles, which sometimes are sold to fund the organization’s various programs. In such cases, you can only deduct the proceeds the organization gets from the sale of your vehicle. Goodwill would send you a notice acknowledging your vehicle donation as well as the sale price that you can include in your deductions.

The IRS requires taxpayers to get an appraisal from a professional appraiser for one item or a group of similar items donated to Goodwill Industries or another charitable organization if those items are valued at more $5,000. Form 8283 also needs to be included with your tax return if you make such a sizable contribution to a charitable organization.