Fair Market Values for Clothing Donations for IRS Deductions

Fair Market Values for Clothing Donations for IRS Deductions
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That shirt that never looked right on you and those pants that mysteriously shrunk in the dryer could net you a nice tax deduction when you donate them to a charity. Make someone else happy with your clothes, create more space in your closet, and chip away at the amount you owe Uncle Sam. The big question is always placing a value on your discarded duds. The IRS says you can take the “fair market value” of your donations, but determining that will require a little detective work on your part.

Online Guides

Several major charities, such as Goodwill Industries and the Salvation Army, publish online guides to help you determine the value of your formerly-shiny shoes and faded jeans. Turbo Tax also has a free software program that lets you track and value donated items. Fill in your item and rate its condition to see a valuation. These guides represent national averages, so the prices you see there may be more or less than the market value in your area.

Comparison Shopping

If you think items sell for more in your part of the country, you can do a little comparison shopping at local thrift stores. Check stores where you donate clothes and see what similar items sell for on their racks. Snap a few cellphone pictures to back up your claims, should the IRS ever ask. Make sure you’re comparing comparable items – clothes of similar vintage and condition.

Valuable Items

If you’re donating a designer ball gown or a mink coat, all the rules about used clothing valuations fall by the wayside. Vintage and designer clothing may actually sell for more than you originally paid for the item. If the item you donate is worth more than $500, the IRS wants an appraisal as proof of this value. For items less than $500, research the value on vintage clothing sites or even eBay.

Other Considerations

To deduct the value of clothing you donate, it must be in good, usable condition. Rags are rags and not worth anything when it comes to donations. If something is so dirty or worn out you wouldn’t want anyone to know it was yours, recycle it for washing windows and forget the tax deduction. Also, be sure to get a receipt for your donation. At organizations that give you a generic receipt that simply states they received a donation, attach an itemized list, describing the items and the value you’ve determined for them.