How to Get a Tax Write Off for Consignment Clothes

Take a charitable deduction for consignment clothing that doesn't sell.

Generally, you cannot get a tax write-off for consignment clothes because you receive financial gain by selling them. However, an exception to this occurs when you place items in consignment to a consignor, the clothing does not sell and the business you consigned the clothing with donates the items to charity. By using a consignment seller that will donate your unsold items, you can take a charitable deduction for the consignment clothes.

Things You'll Need

• Charitable donation receipts

Instructions

1. Read the consignment agreement of the consignor carefully to find one that donates unsold items. Be careful and read the small print because some consignors will donate your unsold items, but they will not issue a receipt for the donated items. You must have a charitable donation receipt for your donated clothing to deduct the items as a charitable contribution.

2. Enter into a consignment agreement with the consignor. Sign the contract that gives the consignor the right to price your clothing, sell the clothing, deduct a percentage for their effort, return the remaining selling price to you and donate any items that do not sell within a specific period of time.

3. Receive receipts for consignment items that do not sell. Save these receipts throughout the entire tax year to enable you to total the value of all consignment items donated throughout the tax year. You will need the fair market value of the consignment items (as set by the consignor). As long as the total market value of the items does not exceed $500, place the total onto line “17” of Form 1040 Schedule A. If the total market value of the items exceeds $500, record the data on Form 8283 (Noncash Charitable Contributions).

4. Complete Form 8283 to attach to your income tax form. Fill out the information in “Part 1” of page 1 that provides information about the donated consignment items and the contact information of the donee organizations. Total the amount you claim as a charitable donation and place this number on line “2b.” Complete “Part 1” of page 2 only if the donated consignment items had a value of over $5,000 -- these items must have an appraisal to certify their value. Have the appraiser sign the form to declare the value. Get the donee organization to complete “Part IV” of the form, including the name of the organization and the address. The representative must sign and date the form at the bottom.

5. Add the total market value of all consignment items donated to charity and place the total on line “17” of Form 1040 Schedule A. Complete the remainder of the income tax form.

6. Sign the completed income tax form. Enclose completed Form 8283, if applicable, and mail the income tax form to the IRS to file your taxes.

Tips & Warnings

• The IRS stipulates that donated used clothing must at least be in good used condition. Because most clothing consignors have stringent quality requirements, your consignment clothing should fit within the IRS stipulations.

References

• IRS.gov: What Is Fair Market Value (FMV)?
• IRS.gov: Organizations That Qualify to Receive Deductible Contributions
• IRS.gov: Charitable Contributions
• Shop My Girlfriend's Closet: FAQs

Resources

• IRS.gov: Form 8283
• IRS.gov: Form 1040 A