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How to Value Your Clothing Donation

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Goodwill Collection BoxEvery year, my wife and I go through all of our clothes and pick out the stuff that we haven’t worn in the last year. You know what these are, the polo shirt that has been in the back of the closet since two years ago, the button down that no longer feels right, the sweater that’s ugly but old enough that your aunt forgot she gave it to you… we throw all that stuff into boxes or bags and send them over to our local Goodwill for a sweet sweet tax deduction. We’ve only been able to do this the last three years, since buying a house, because you can only deduct those donations if you itemize your taxes. I think philanthropic donations should be deductible even if you itemize but those are the rules.

Donating “stuff,” be it your car, your clothes, or something else, was one of the ten year end tax saving tips and you still have time to do it. Even if you don’t itemize, consider doing it just so you can clear yourself of some clutter. Your donations let Goodwill or the Salvation Army earn extra money to fund their operations and it provides affordable items for purchase from their customers.

The trickiest part about the entire process is how do you assign a value to the items you’re donating? Chances are the IRS will never come knocking on your door and asking how you valued your clothing because it’s simply not going to be a lot of money involved. However, this doesn’t mean that you can shirk on documenting because if they do show up and you don’t have records, they may invalidate the donation and you could find yourself paying interest and fees!

How To Donate & Document Donated Clothes

  • Gather up everything and create a list of items: Simply create a list of all your items and include as much information as possible. Anything you want to donate has to be in “good” condition or better. You can put the brand and type of clothing (Stafford button down, American Eagle polo, Gap jeans, Ann Taylor sweater), its condition, the estimated purchase price and date (if you can remember), and the fair market value at the time of donation. The more information you have down, the better. If you think anything you list sounds unbelievable, take a picture (the IRS may not believe you’re donating a $200 suit in good condition, for example)
  • Rememebr to get a receipt: Whenever we go to the nearby Salvation Army, we just give the bag(s) to the person working the bench, he or she tosses it in a huge pile, and then they hand us a pre-signed blank receipt. Some places won’t give you a receipt for small donations but I would always get one and fill it out with as much information as can fit, then just refer to another page. Some people recommend putting something vague (because you have better records) but I put a listing (3 shirts, 2 pants, loafers, etc) of actual items and then refer to another document with specifics.
  • Worth more than $500? If you donate more than $500 of clothing, then you’ll need to fill out Section A of Form 8283 Non Cash Charitable Contributions. Don’t let the form scare you, you won’t need an appraisal unless you donate more than $5,000 – which is a lot of used clothing.
  • Claiming the deduction: Last step is to remember to claim the deduction on your tax return! You’ll always list it on Schedule A of the 1040 but if you do your taxes with a software product (highly recommended), they’ll just ask you as you fill it out. They may even offer guidance on valuation.

Determining Clothing Fair Market Value

And… here’s the tricky part. By definition, the fair market value is the reasonable price that a regular person would pay for that item. Imagine if you saw that item at a garage sale or a used goods market, how much would you pay for it? That’s the fair market value… you see how ambiguous it is?

Fortunately, there are plenty of resources available to help you determine how much your stuff is worth. The Salvation Army has a valuation guide for everything from clothing to appliances, children’s items to furniture. It’s pretty comprehensive and includes a range so you can decide, based on condition, how much it’s worth. Goodwill has a similar valuation guide in PDF form.

Finally, if you’re an IRS publication junkie, you can always check out Publication 561, Determining the Value of Donated Property, and Publication 526, Charitable Contributions, for more specifics, scenarios, and other useful tidbits boringly explained.

However you value your old stuff, remember that donating it in the first place is more important than not donating because you aren’t sure how to handle the deduction. In the end, it won’t save you a ton of money regardless and it’ll make life easier for some charities and perhaps some individuals.

(Photo: roadsidepictures)

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17 Responses to “How to Value Your Clothing Donation”

  1. SK says:

    Very nice post at the right time. When I donated “Stuff” at my local Goodwill they handed me over a yellow presigned and dated slip. Is that the actual receipt or they should have given me a proper receipt with details of what I donated? Can you post a sample image of it alongside your post that would help.
    Rgrds SK

    • jim says:

      I haven’t donated to Goodwill so i don’t have an example, but that’s the actual receipt. You can write in what you donated.

    • nickel says:

      Whenever I do a bulk donation to Goodwill, I write up my own itemized list and then write on the receipt “See attached list”. Not sure how audit-proof this would be, but it’s better than nothing.

  2. Jim says:

    Thanks for the links to the valuation guides. We donated a lot of ‘stuff’ this year so those will be handy for us.

  3. CUMarketer says:

    TurboTax has a great site where you can record your donations throughout the year. I’ve been using it for all my donations and it’s so easy! Check it out!

    http://turbotax.intuit.com/personal-taxes/itsdeductible/
    ________________________________

    TurboTax ItsDeductible Online provides everything you need to keep track of your donations — for FREE

    - Easily Tracks Thousands of Donated Items
    as well as mileage, cash, bonds, and mutual funds.

    - Provides Resale Values for Your Non-Cash Donations based on the style and condition of the item.

    - Instantly Imports to TurboTax* at Tax Time
    and fills out the right tax forms for you.

    - Add Donations any Time 24/7, 365 days a year, and save the information on our secure servers.

    - Helps Reduce Your Risk of an Audit with values based on IRS guidelines.

    - Get Fast Answers to Your Donation Questions for Free with TurboTax Live Community.

  4. I think the last line you wrote was the most poignant, Jim. The day after Christmas I wrote a post about how I got people to give me their unwanted items so that I could bring them all to Goodwill, but I didn’t take a receipt because I just wanted to do something completely selfless for a change (not that there’s anything wrong with taking the deduction-I’ve done it plenty of times in the past).

    One thing that I have seen, especially with the IRS cracking down on the valuation side of the deduction in recent years, is that many people are starting to take the documentation more seriously, specifically when it comes to higher-end items such as cars and furniture. They are taking pictures of the items with the time stamp on for further proof, as well as any documentation relating to the purchase and/or any maintenance on the items. The same could probably be done for clothing, particularly higher-end and designer label garments.

  5. I’d highly recommend using one of the software programs like It’s Deductible. That one is available online now for free if I’m not mistaken. It usually pulls in values higher than what I would initially expect, but I’ll make the wild assumption that a company publishing tax software would do reasearch to justify those valuations before putting it out there.

    As for the receipt you get, I’ve found it depends on where you donate and who is working. If I bring stuff to Salvation Army, they’ll usually put a generic description like “2 bags clothing”. My nearest Goodwill location usually just gives me a blank signed receipt and I can fill in whatever I like. Either way I usually prepare my own detail listing with valuations for each item and staple it to the receipt provided. If it is a lot of stuff, I’ll also take a picture of the pile for my records.

  6. mbhunter says:

    You wrote: “I think philanthropic donations should be deductible even if you itemize but those are the rules.”

    Isn’t that missing a “don’t”?

    And just to be clear, the $500 limit for filing Form 8283 applies to all non-cash donations, not just clothing.

  7. Emily says:

    Lots of great ideas here! One thing a past coworker told me she would do is whenever she would donate something of slightly significant value, she would take a Polaroid of it and write her estimated value of it on the white part of the picture. That way, at the end of the year, it was easy for her to keep track of everything she gave away. She said it was also great proof in case you are audited. Polaroid just stopped making its film, but now that everyone has a digital camera, it’s easy to take pics of every item and store it on a folder on your computer.

  8. Thanks for the lead to the IRS pubs–I had no idea!

    It’s a day late & a dollah short for me: I’ve already donated $390 worth of clothes (by my estimate). I figured the fairest way to figure their value was according to what a friend and I got at a recent yard sale–between $5 and $10 per item, depending on its condition and quality.

    Never thought of writing down the designer name. I listed the loot by category: jeans, better slacks, knit shirts, better shirts, skirts, dresses, etc., and assigned a per-item dollar value to each category. So, say five pairs of jeans in good condition ($5 apiece) would come to $25. I put this list in Excel, printed out two copies with the date and the name of the charitable organization, offered them a copy (they didn’t need it), and then stapled the receipt to my copy and stashed it in the tax documents file. I can’t imagine an IRS auditor demanding to see photos of your pile of cast-off clothing — certainly not if you’ve assigned a reasonable price to the junk.

  9. Anonymous says:

    hello – I’m too lazy to write down exactly the brand/make of the items (esp. clothes) – so with the popularity and ease of DIGITAL CAMERAS, a simple snapshot of the donated item(s) could serve as evidence enough.. right? this is my technique (as well as holding on to the slip at the local goodwill)

  10. Carol Peacock says:

    I have several hundred videos and want to donate them. I have found a few places that will take the videos but need to put a value on them. Individually, how much would each video be worth?

  11. Doug says:

    ItsDeductible is free but won’t spit out a report unless you use TurboTax. I use a CPA. There’s another program out there that is a stand-alone fully-featured product called CharityDeductions.com (http://www.charitydeductions.com/cm/Home.html).It’s $20-25 and has a free trial which cuts off as soon as you’ve saved enough in taxes to pay for the membership – which doesn’t take long! I saved $1000 in taxes with this last year. I need all the money I can get. I’ll never overpay my taxes again!

    • Sam says:

      Doug,

      Seems like your a promoter huh? I worked at an accounting firm and just set up an account at charitydecutions.com and it does seem like an excellent save timing tool. But, I’m starting to think it’s not much better then the free TurboTax. What’s your thoughts?

  12. John says:

    Of the various answers to my question to Google, this was the best … clear, best references. Thanks!


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