The amount of your charitable deduction for clothing donations is always the items' fair market value.
The overall value of tax-deductible clothing donations dictates how much you can write off, and the IRS puts the responsibility on you to determine the value of your donations. No specific clothing donation guide is required, and you may not need one if you follow some straightforward IRS principles.
IRS Clothing Donation Value Rules
Any valuation guides you reference are all based on the tax law's definition of fair market value. For clothing, unless the items are in good used condition or better, they are deemed to have zero value. The one exception to this rule is when an item's deductible value is more than $500 and a qualified appraisal supporting that value is filed with your tax return. In this case, the clothing doesn't have to be in good used condition. According to the IRS, fair market value reflects the amount that a willing buyer will pay for the item. For the majority of clothing donations, fair value usually is much less than the price you originally paid for the articles of clothing. In other words, it's the price that thrift stores are able to obtain for the item.
Value Guide Resources
The Salvation Army -- a well known nonprofit that resells used clothing donations -- annually publishes its Donation Value Guide that many donors use to estimate their charitable deduction. This guide provides high-low resale price ranges for specific categories of used clothing items by gender and age. Given the wide price ranges for certain items, you have some discretion determining the range where your donations fall. You also can use other online resources to estimate clothing values, such as TurboTax's It'sDeductible tool. It'sDeductible offers the actual fair market value of donated clothing based on each item's style, condition and other details you enter into the tool.
Penalties for Extremely High Clothing Values
Carelessly assigning inflated and inaccurate values to clothing donations, whether in error or intentionally, can lead to some expensive penalty charges. When you take a deduction for an item of clothing that is 150 percent or more of its real fair market value, -- such as deducting $16 for a shirt worth $10 -- the IRS will increase the amount of tax you underpaid because of it by 20 percent as a penalty. This penalty is owed in addition the tax you underpay. A 40-percent penalty, however, is charged for a deduction that's 200 percent or more of the clothing's real value.