In-kind donation tax deductions for used computers, explained

Donating a computer is straightforward. Deducting it correctly is where people get nervous, usually because they have heard three contradictory things. Here is the shape of the rules in plain language. This is general information, not tax advice — your accountant has the final word.

The value is what it is worth now

Non-cash gifts of used property are generally deducted at fair market value: the price a willing buyer would pay a willing seller for that item in its current condition. A laptop you bought for $1,800 four years ago is not an $1,800 deduction. Look at what comparable refurbished units of the same model and specification sell for today, and use that. Screenshot the comparables and keep them with your records.

Thresholds that change the paperwork

1. 01Under $250: keep a receipt or reliable written record from the organization.
2. 02$250 and above: you need a contemporaneous written acknowledgement from the nonprofit before you file.
3. 03Over $500 in total non-cash gifts for the year: file Form 8283, Section A, describing the property and how you acquired it.
4. 04Over $5,000 for a single item or a group of similar items: Form 8283, Section B, plus a qualified appraisal and the nonprofit's signature.

What a valid acknowledgement letter contains

• The nonprofit's legal name and EIN.
• The date the gift was received.
• A description of the items — model and quantity, and serial numbers if you want them tracked.
• A statement that no goods or services were provided in exchange.
• No dollar figure supplied by the nonprofit. Valuation is the donor's responsibility, and a charity that assigns a value for you is doing you no favors.

Businesses versus individuals

A C corporation deducts charitable contributions on the corporate return subject to a percentage-of-taxable-income limit, with carryforward for the excess. Pass-through entities pass the deduction to owners. If the equipment was depreciated, the deduction interacts with your basis, so the value may be limited to adjusted basis rather than market value. This is exactly the point at which to ask your accountant instead of a blog post.

Confirm the organization is eligible

Only gifts to qualified organizations are deductible. Check the recipient in the IRS Tax Exempt Organization Search before you donate, and ask for the EIN in writing. Futurenomic Resources provides its EIN on every acknowledgement letter, along with a NIST 800-88 data destruction certificate for each drive.

One practical note: the deduction is rarely the reason a donation is worth doing. The reason is that the machine goes to an adult finishing an eight-week digital skills course who has no other way to get a computer. The paperwork just makes it painless.