How to Determine the Fair Market Value of Clothing Donations
Making clothing donations to a non-profit group or charity can have several benefits. It can clear away space in your home, can get rid of items that you no longer use, can help people who need the items for themselves or for the potential profit of selling them, and can offer an IRS itemized charitable tax deduction. However, it can be difficult to figure out the value of used clothing, especially if it is older or worn out. There are a few methods for determining the fair market value of clothing donations.
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Instructions
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Be aware that all clothing has to be in "good" or better condition to be donated and to determine a fair value. Items can show signs of use, but if they are hopelessly stained or unusable for other reasons, do not donate them. (If you do not want to discard the item, old stained clothes make excellent cleaning and dusting cloths.)
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Estimate what each clothing item is currently worth, which is the "fair market value." One good way to do this is to determine how much you would be willing to pay for it in its current condition. Be fair in your estimate--wildly inflated estimates will raise a red flag and might result in an audit by the IRS.
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Get a more specific idea of market value by looking at valuation lists, available at Salvation Army and Goodwill retail stores. They also have lists available online (see Resources section).
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Write down a list of all clothing items that you are donating, including type (example: shirt), brand (example: Gap), condition (example: excellent), and estimated market value (example: $5). It can be a good idea to take a picture of the clothing for reference.
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Be aware that if you claim a deduction for donating more than $500 in clothing items, you will need to fill out Section A of Form 8283, Non-Cash Charitable Contributions, and submit it with your federal tax return.
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References
Resources
- Photo Credit clothing store image by Gina Smith from Fotolia.com
