Unfortunately, the Internal Revenue Service won't give you a tax credit for donating furniture. Credits are limited, with specific qualifications set by the government, and they decrease or eliminate your tax bill to the IRS. You can take a tax deduction for donated furniture, however, subject to some rules. Deductions reduce the amount of income you must pay taxes on.
If you purchase a new bedroom set and decide to give the old one away, you may or may not be able to take a tax deduction for it. The catch is who you give it to. Under IRS rules, the recipient must be a qualified charity. No matter how badly your neighbor's daughter might need the furniture, it's not deductible to you because she's an individual. The donee must be an organization, such as the Salvation Army or the United Way. The IRS offers an interactive search tool on the Internet where you can enter the name of the charity you're considering and make sure it's approved. You can also usually donate to religious institutions, nonprofit organizations and certain government programs if the donation benefits the public good and not the government itself.
You can't deduct what you paid for your furniture. For example, even if you purchased your bedroom set for $6,000, the Salvation Army rarely values such items at more than $1,000, and that's if the set is in exceptionally good condition or is otherwise remarkable in some way. Under IRS rules, your deduction should be the furniture's fair market value – what a reasonable person would be willing to pay you for it if you listed it in the want ads or on eBay. If someone is only willing to give you $50 for the bedroom set because it's really seen better days, you probably shouldn't bother trying to deduct its value. The IRS mandates that all furniture items donated after August 17, 2006, be in at least good used condition. If your bedroom set isn't in good used condition and if you try to deduct more than $500 for it anyway, you'll have to submit an appraisal to the IRS to prove that it's worth this much. This might be the case if it's an antique or has some storied past that makes it unique.
Claiming a deduction for a furniture donation requires itemizing. This involves completing Schedule A and attaching it to your return. You must also submit Form 8283 if the value of all your donations over the course of the entire year – including the furniture – is more than $500. You'll also need a written receipt from the recipient, identifying it by name and describing the furniture. The receipt should also state whether you received anything in exchange for your donation. If you did, this value must be established also, and you can only deduct the difference.
Potential for Audit
The IRS uses a computer to scan all tax returns upon receipt. One of the things the computer looks for is anomalies between the amount of charitable donations you're claiming and your income. People can be expected to be generous – but not unreasonably generous. As far as the IRS is concerned, even if you earn six figures, you're probably not going to make qualified donations of more than $4,000 or so. For example, if you earn $90,000 and you claim deductions for $10,000 in charitable donations, it possible that the computer will flag your return for review by an agent to determine if an audit is required.
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