Using ‘ItsDeductible’ to Figure the Value of Donations

Written by nickel - 5 Comments

This past year we donated a ton of stuff to Goodwill. For starters, we moved. On top of that, we’re done having kids, and they’re growing fast. Thus, we had lots of stuff to clear before, during, and after the move. Right after our moving sale, I hauled several loads of stuff to the Goodwill donation center, including tons of kids clothing, a decent amount of adult clothing, toys, random housewares, etc. We also made another donation run right at the end of the year (just in time to claim it on our 2006 taxes).

Prior to each trip, I wrote up a list of what I was donating and then stapled it to the Goodwill receipt (the receipt instructs you to either list the items directly on it, or to attach a list if you need more space). But that was the easy part… The hard part is figuring out what everything was worth. None of it was high dollar stuff, but it was pretty valuable in aggregate. In the past, I’ve just done a lowball guesstimate and moved on.

This year, however, Turbo Tax greeted me with an offer to use their online valuation service called ItsDeductible. I figured it would be tedious to enter everything in, but I also figured that it might end up being worth the trouble, so I logged in and got started.

As it turns out, I was right on both accounts… It took me awhile it get everything entered — you have to find it, determine what condition it was in, and then enter the quantity — but the end result was value that was probably 2-3X higher than I would’ve guesstimated by just looking on the lists and ballparking it. The other piece of good news is that Turbo Tax automatically downloads the information and incorporates it into your return. Pretty slick.

On a per item basis, nothing seemed out of line, so I’m fairly comfortable with the results. However, I’m still not sure of is how these valuations would hold up in the face of an audit. They seem reasonable, but who knows?

Published on February 26th, 2007 - 5 Comments
Filed under: Taxes
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Comments (scroll down to add your own):

The Salvation Army also published a resale guide that you can rely on (and it’s free).

The values were much higher than I would have used (and much higher than I guessed last year). I used the middle of the high and low values even though most of the items were in like new condition.
Comment by Kirk Walsh — Feb 26th 2007 @ 1:19 pm
My advice is to lowball the estimate from the tax prep software on your tax return, and then if you are audited you can provide the printed estimate which will be higher. Chances are good that they will take your printed estimate at face value during the audit and you will wind up with a larger deduction. As long as everything else is on the up and up (meaning both trying to cheat the IRS which I doubt you’d do and not making mistakes which anyone can do) then you are in a win-win situation.

The lower deduction would make it less likely you have to deal with the pain and hassle of an audit while still getting some sort of compensation for your charitable giving.

In the case of an audit, you’ll wind up getting paid some of your tax money back since the IRS will actually owe you money.

It doesn’t get publicized much because audits are a pain in the butt process to go through, but you know that after the audit you will have everything correct. If you missed something, an audit will bring it up and you may wind up with more money. This is especially likely in cases like yours where you seperately prepare your taxes and then have a professional prepare them, so you will most likely pay everything you need to and not miss anything from that direction.
Comment by Blaine Moore — Feb 26th 2007 @ 2:16 pm
I too was surprised by the values that It’s Deductible gave me.

I have a fair amount of faith in Intuit’s methodology. Basically the application uses historical ebay data to estimate the fair market value of your donations. Intuit believes that this is a valid approach that the IRS will look favorably on.

Of course it’s important for the user to be honest about the quality and quantity of the donated goods. Accurate documentation can’t hurt either.
Comment by Wes — Feb 26th 2007 @ 4:43 pm
Doesn’t itsdeductible come with an audit guarantee? I believe it did for a few years, but not sure if it still does.
Comment by Saving Advice — Mar 1st 2007 @ 10:26 am
How cak I get recognized by the Its Deductible program? I type in all the required info, but it always comes back and always ask the same questions again.
Comment by Margaret Welch — Mar 30th 2008 @ 4:09 pm