Many people donate used clothing to charities such as Goodwill or the Salvation Army. Charitable contributions are tax deductible; however, taxpayers must keep accurate records, donate only appropriate items and save receipts from every donation. Charitable contributions can add up at tax time, so it is important to stay organized.
Plan to Itemize Deductions
The deduction for charitable clothing donations is one of many that you can itemize, or list individually on your tax return. If the taxpayer's total itemized deductions add up to less than the standard deduction that the Internal Revenue Service (IRS) allows everyone to take, it does not make sense to itemize deductions. If you decide it is best to take the standard deduction, charitable clothing deductions will not lower your taxes.
Before donating to charity, organize donated clothes by type and list them in a record book. The more detailed the itemized list is, the better. The IRS often audits tax returns that take advantage of this deduction because it is often abused. In the event of an audit, a detailed list along with a receipt from the charity proves that a taxpayer donated clothes that were in the condition required by the IRS.
Appraisal of Donations
Examine each clothing item as you list it. If an item is worn, full of holes or otherwise unsuitable for wearing, throw it out rather than donating it. The IRS requires that donated items be in good to excellent condition, so consider taking photographs of each item or group of similar items. Also note the item's quality on the itemized list.
Taxpayers must appraise the value of donated items. Estimate this by considering the age of the item, its quality and the cost of similar items when bought new. Note the value of each item on the itemized list.
It is not necessary to get a professional appraisal unless more than $5,000 worth of items will be donated to charity in a year.
Read More: How Do Donations to a 501(c)(3) Work in Taxes?
Receipts from Charities
Save all receipts from charitable donations. In the event of an audit, the receipt proves you actually donated items. By law, charities do not have to give taxpayers a receipt for donations under $250; make sure to ask for one if they do not offer.
Jack Ori has been a writer since 2009. He has worked with clients in the legal, financial and nonprofit industries, as well as contributed self-help articles to various publications.