Tax Deductions for Individual Clothing Donations
The U.S. tax code encourages donations to charities by making gifts tax deductible. Donations can be in cash or can be non-cash items such as cars, furniture and clothing that charitable institutions can sell for cash. The donor must properly document the details of the donation and cannot receive any benefit from the charity that received the gift.
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Itemize Deductions
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You can deduct donations of clothing from your income only if you itemize deductions on your return. Taxpayers who use the standard deduction, where they deduct a fixed amount from their taxable income instead of actual expenses, could no longer deduct charitable donations from income beginning 1986.
Condition
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Beginning August 2006, donated clothing has to be in at least good used condition to be deductible. The IRS does not define "good" in the code. However, condition does not matter for individual items whose deductible value exceeds $500. For these items, the taxpayer must obtain an appraisal by a qualified appraiser. The appraisal must contain specific items listed in IRS publication 561, such as identifying information, condition of the item, date and reason for appraisal, and name, address, signature and qualifications of the appraiser.
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Qualified Charity
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The IRS defines qualified charities as entities organized under the laws of the United States or individual states, the District of Columbia or any possessions such as Puerto Rico. They must be created for educational, charitable, religious, scientific or literary purposes or for the prevention of cruelty to children or animals. Many associations for veterans, fraternities and government agencies, such as police and fire department, also qualify. Donations to charities in Canada and Mexico are tax deductible under certain circumstances. IRS lists qualified charities in Publication 78 available on their website at irs.gov. Click on "charities and non-profits" at the top of the IRS webpage.
Determining Value
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Individual clothing items worth less than $500 do not require a professional appraisal. Their value for deduction purposes equals what the charity can normally receive when selling them. The IRS has not approved formulas for calculating deductible values of clothing based on original value. Large charities like Goodwill Industries and the Salvation Army furnish lists of the prices they charge for used clothing for taxpayer's use. Goodwill Industries' webpage is at goodwill.org. The Salvation Army webpage is at salvationarmyusa.org.
Documentation
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You must keep a record of all clothing donations. The charity should give you a written statement with its name, date and location of the donation and a description of the item's detailed enough to determine its value. If you use a drop-off site to donate clothing and cannot get a receipt, make a written record with the same information. Individual donations worth more than $250 but less than $500 do not need an appraisal, but do require a separate written statement from the charity for each item worth over $250. The statement should include the above information plus additional information discussed in IRS Publication 526, such as any benefit you will receive from the donation. Your records should include how you determined the value and any proofs.
Filing
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Enter the total value of non-cash deductions, including donations of clothing, on line 17 of Form 1040 Schedule A. If any individual donations were valued at more than $500, list them on IRS Form 8283 and include it with your return.
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References
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