The IRS allows taxpayers to take a deduction for clothing donations that follow certain rules.
The Internal Revenue Service allows you to deduct the value of used clothing that you donate to a qualified charity during the tax year. However, in order to qualify for a deduction, your clothing donation, as well as your tax filing status, must meet certain requirements. For some clothing items, you may need an appraisal in order to take a deduction.
Significance
The IRS realizes that citizens benefit from purchasing good quality used clothing that might otherwise be discarded. In an effort to encourage the donation of clothing, the government allows a deduction on a donor's income tax return, if the donation qualifies. You may not claim a clothing deduction with a value higher than 50 percent of your gross income.
Misconceptions
In order to take a deduction for your used clothing donation to charity, you must file an itemized tax return and the total of your itemized deductions must be more than the standard deduction rate. For example, if you qualify to take a standard deduction of $5,000, then the total of your itemized deductions must exceed $5,000. Before deciding whether to itemize, add your deductions together and make sure they are more than the standard deduction for your filing status. (See Resources).
Types
You will enter the amount of your used clothing deduction on IRS Form 1040, Schedule A, if your total deductions for the tax year are less than $500. Make sure you keep a detailed log of all your donations, a receipt from the charity and their estimated value. If you donate clothing valued at more than $500, you will complete additional paperwork and you will need an appraisal of the items. In addition, the charity to which you donate must qualify for receiving your donations. (See Resources).
Features
For clothing donations under $250, you may estimate the market value you would receive if you sold the items in a yard sale or in another venue, such as eBay. The fair market value must not be more than the new cost of the item. Keep a record of the date of purchase or an estimated date, the original purchase price, a photo of the item(s), along with dated and signed receipts from the organization where you donated the clothing. Keep these records with the rest of your tax records for a period not less than four years.
Considerations
You may have a large donation without realizing it. You don't have to buy designer clothing to have a donation worth more than $1,000. Most cases of large used-clothing deductions are associated with the death of a loved one, whose estate you must settle. In this case, you must contact a professional appraiser to evaluate all the clothing items. In addition, it's a good idea to include an explanatory note with your income taxes, stating that the large dollar amount is associated with a deceased's estate.
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