Saturday, January 24, 2009

Donating Quilts - And Getting Tax Benefits

Did you realize you can donate any quilt, antique or modern -- even one you made yourself -- and be able to take its full value off your taxes?

some background first:
For many years, the IRS would not allow you to donate your own quilts...unless you didn't make them. If you stitched the quilt, regardless of whether you were Libby Lehman, Marie Osmond or Zelda Schwartz, you could only deduct the cost of materials used. (Provided, that is, you'd kept receipts.) Supposedly, this was enacted to stop artists from abusing the system -- i.e., quickly scribbling off a drawing or two, then alleging big-bucks donations on their tax forms. (The IRS just doesn't understand how long it takes to make a quilt, do they...)

That has changed.

Now the IRS will allow you to take full value, provided you have an appraisal from a certified appraiser for anything more than $500. (For items you value at less than $500, make sure you have some kind of basis for assigning that value.) Here's how to do it:

Step One: Find a certified appraiser. In other words, they're licensed/approved by a governing group that covers textiles. (So far, the IRS does not 'count' appraisals done by uncertified appraisers. I count a number of these among my friends and colleagues -- and they're terrific -- but so far, the IRS does not allow you to use their work. Who knows, this may change in coming years.)

Three places to look:
International Society of Appraisers -- appraisers in this organization do all sorts of items, from furniture to dishes, textiles to books. Go here:
http://www.isa-appraisers.org/ISA_form.html

American Quilter's Society -- this group only certifies for textiles. (Warning: I am certified by this group, but I'm not mentioning this to float my own boat. Go to the appraiser nearest you.) AQS has a list of appraisers here:
http://www.americanquilter.com/about_aqs/appraisers.php

Another group, PAAQT (Professional Association of Appraisers--Quilted Textiles), is made up of only AQS-certified appraisers. (Warning #2: I also belong to this group.) They not only have an extensive list, but several articles on appraisals and why they're important overall. Go to:
http://www.quiltappraisers.org/

Step Two: Have the quilt appraised. Be sure to specify that you want a "Donation" value. There are also "Insurance" values and "Fair Market" values, but the IRS wants to see that you mean business, donation-wise. Note: any money you pay for the appraisal is also tax-deductible! Keep a receipt, and list it under the "misc." category.

Step Three: Along with the appraisal form or report, have the appraiser fill out, sign and date IRS form #8283 "Noncash Charitable Contributions:"
http://www.irs.gov/pub/irs-pdf/f8283.pdf
If the appraiser has not included some kind of listing of their credentials with the appraisal, ask for a summary. (My own appraisals have this as the last page, as a matter of course.)

Step Four: Make a copy of the appraisal (and the appraiser's credentials, if needed). Take it, along with Form #8283 and your quilt, to the charitable organization. (You should have already determined that they were an official nonprofit...visit the IRS website for help.) If your group wants to become a nonprofit, here's a start:
http://managementhelp.org/strt_org/strt_np/strt_np.htm

Step Five: Get a receipt from the organization for your donation. The Rocky Mountain Quilt Museum, where I often volunteer (and my California Gold exhibit is currently hanging), uses a "Deed of Gift" certificate. Have the organization rep fill out, sign and date Form #8283, as well. (They may also ask you for the appraisal -- or they may choose to have the quilt appraised themselves. I've seen it done both ways.)

Step Six: Bid a fond farewell to your "baby," grab your receipt and Form #8283 and go get a cup of coffee. Put the paperwork in your tax files, along with a copy of the appraisal.

Step Seven: While doing taxes for the year of donation, declare the appraised value of your quilt as a "noncash charitable contribution." Include the signed copy of Form #8283, a copy of the appraisal, plus appraiser credentials. (Make copies of everything for your own files before you mail the envelope to the IRS.)

Think of the possibilities. That cause you really believe in? Now you can help them. Quilts can be donated to museums for collections, which will help those museum educate others (and incidentally, preserve the quilt.) Quilts can be sold to help raise money for breast cancer research. (Members of the Crazy Quilt Society make specific pieces all year round for this purpose.) They can be auctioned; one friend donates a quilt to her local Christian school's annual fundraiser. And many guilds use quilts for a yearly raffle to help raise money for their activities.

If you donated a piece last year -- and it is still available for examination by an appraiser -- you could ostensibly still have the appraisal done for your 2008 taxes. (Just don't wait until the last minute to ask the appraiser to do this for you! Things always get a little nutzy for me now in early April...)

Even better, plan ahead now for your 2009 taxes. Appraisers' fees generally are very reasonable. I would urge you to consider having your quilts appraised anyways, to protect them in case of damage or theft. Changing these "insurance" value appraisals to "donation" value, when the time comes, is not that difficult.

Think of the people and groups you could help, by donating a quilt!

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Zzzzzzzz...

After four hours at Tuesday Morning's checkout line today, I can honestly relate. Okay, maybe a nap AND a cookie.