Value of Clothing for IRS Deductions

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The federal tax code offers a deduction for charitable donations. This includes donating clothing to charities. It is important that you keep good records of the items you donate and an item's condition to help accurately determine how much to deduct.

Clothing Deductions Generally

The amount you will be able to deduct for used clothing is going to be much less than the price you paid for the item. The Internal Revenue Service (IRS) does not have a specific formula or amounts to assign particular items of clothing; the IRS simply looks to a deduction that is equal to the fair market value of the item. Since you are required to deduct an amount that is equal to fair market value, you must look to external sources to determine that number.

What Is Fair Market Value?

Fair market value is deemed to be the current, going price for an item between a willing buyer and seller in an open market. A good rule of thumb to use in determining the value of an item is how much it would cost a second-hand shop, like a consignment shop. Organizations that regularly take clothing deductions, like Goodwill and the Salvation Army, have established guidelines that may assist you in determining the value of the items that you donate.

Requirements for Deduction

After August 17, 2006, the IRS changed the rules for clothing deductions. Clothing is deductible only if it is in at least good condition. The IRS also requires a qualified appraisal if you donate and subsequently deduct an item worth more than $500. This appraisal must be attached to your tax return.

When Can You Take a Clothing Donation Deduction?

To deduct the value of your charitable donations of used clothing, you must itemize your taxes. This means that you file a Form 1040, U.S. Individual Income Tax Return, with a Schedule A, Itemized Deductions. You do not take the standard deduction. If you take the standard deduction, you are not eligible to take a charitable donation deduction, and you will not be required to keep records of your donations of clothing.