Can You Deduct Clothes Donations You Put in a Drop-Off Box?

by Mike Parker, Demand Media
    The IRS recommends using thrift store prices to determine the value of donations.

    The IRS recommends using thrift store prices to determine the value of donations.

    So you've cleaned out your closet, and you have a pile of unwanted clothes you'd rather donate than toss. You've also noticed those bins around town that ask you to fill them up with clothes to be donated to charities. It is possible to deduct these donations on your taxes as long as you plan to itemize. However, you do need to do some homework on the cost of those clothes. If you need a receipt, donating to a drop-off box may not be the best idea.

    Fair Market Value

    You first need to know the fair market value of any clothing you donate, regardless of if you use a drop-box or not. The IRS recommends using the price someone would pay for the same clothes if they bought them at a thrift store or consignment shop. The organization will not give you this price; it's your responsibility to assign a fair market value to the clothing.

    Under $250 Rule

    If the clothes you put in the drop-box have a value of less than $250, the IRS won't demand a receipt for them on your taxes. You can ask for the deduction without such proof. The IRS does recommend you keep a written record of the donation. Include the organization, date and location, a description of the items and their fair market value. This information will come in handy if you ever get audited.

    $250 and Over

    If you've got more than $250 in clothing donations, you may not want to use the drop-box. You do need a receipt to show the IRS for anything over that amount, and it's not likely you'll get that from an unattended drop-off box. If you have a substantial amount of high value clothing to donate, take it to an attended collection site. You can get a receipt there, as well as a periodic statement to show every donation you made to that group in the tax year.

    Considerations

    Not all drop-off boxes are created equal. The IRS only allows taxpayers to take deductions for donations made to a "qualified" organization. If you donate to one not on that list, you can feel good about yourself but you won't get a tax break even if you have a receipt. It's up to you to check with the IRS, or the organization itself, for that group's current tax status.

    About the Author

    Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps.

    Photo Credits

    • Ryan McVay/Photodisc/Getty Images