Clothing Donations for Tax Purposes

Clothing donations are tax deductible.

Charity is a compassionate act by an individual to help another individual. However, while charity should be selfless, charity helps taxpayers reduce their tax liability for the year. If a taxpayer donates used clothing to a charitable institution, the taxpayer typically can deduct the fair market value of the donation on their taxes. Depending on the taxpayer, the donations can be subject to certain limitations. To receive the most out of the charitable contributions deduction, the taxpayer should keep accurate records of his used clothing donations.

Good Condition

A taxpayer can only deduct clothing if the clothing is in good condition. Generally, good condition means acceptable for another person to wear. It does not mean clothing with holes and stains, which a person would normally throw out in the trash.

Exception to Good Condition Rules

A piece of clothing not in good condition can be deducted if a qualified appraser says the clothing is worth at least $500.

How Much To Deduct

A taxpayer can deduct the fair market value of the clothing.

Fair Value of Used Clothing

For used clothing, the taxpayer should estimate how much someone would actually pay for the clothing. This amount is usually far less than most people guess, but there is no set formula for determining fair market value of used clothing. Taxpayers can look at consignment and thrift shops to get an idea of the price used clothes usually sell for in the open market. Receipts from donation centers typically denote the fair market value of the items donated.

Appraisal Fees

If the amount of a piece of clothing is worth more than $500 and the taxpayer gets the clothing appraised, he can deduct the appraisal fees. The appraisal fee is an itemized deduction of Form 1040 Schedule A. The appraisal is subject to the limit of 2 percent of adjusted gross income.

References

• IRS.gov: Publication 526-Main Content