Recycling gently used clothing that you no longer need is a great way to help those in need, and that's not the only benefit you may reap by giving new life to old clothing. If you donate the clothing to a legitimate charity, you may even be able to take a tax deduction if you itemize on your tax return.
In order to receive a tax deduction for the fair market value of donated clothing, the items must be in good condition, and you must donate them to a qualified nonprofit organization.
Donating Clothes Tax Deduction Tips
In order to donate clothing or any item and receive a tax deduction, you must make the donation to a qualified organization. According to the IRS, a qualified organization is a nonprofit group that exists for religious, educational or charitable purposes. Most organizations that are qualified to accept tax-deductible donations are registered as a nonprofit 501(c)(3) with the IRS. To make sure you donate to a qualified charitable organization, you can check the online IRS Tax Exempt Organizations Search.
The clothing you donate must be in good condition or better in order to take a deduction. The amount you are allowed to deduct is determined by the fair market value of the item, which the IRS defines as the price of the item when passed from a seller to a buyer with reasonable knowledge of the item’s value. For example, if you buy a jacket for $100 and later donate it to a thrift store that sells similar items for $20, then the fair market value is $20.
Some organizations that accept clothing donations, such as the Salvation Army, provide a donation value guide to help you determine fair market value without having to visit a brick-and-mortar thrift store to check prices. (A link to the Salvation Army Donation Guide is provided in the References section). Very few organizations will provide a written valuation for your clothing donation, so it’s up to you to decide on the value of your donated clothing items. You should try to be as accurate as possible since you could be subject to a penalty if you overstate the value of donated clothing.
Exceptions for Clothing Deductions
The general IRS rule is that donated clothing must be in good condition. There is an exception to this rule for clothing items worth more than $500, such as antique clothing. In this case, you will need to provide a qualified appraisal with your tax return to verify the value of your item.
2018 Tax Law
For 2018, there have been inflation adjustments that raised the standard deduction to $12,000 for single and married taxpayers filing individually and $24,000 for married couples filing jointly. This adjustment could change your ability to take a tax deduction for charitable donations, since you can only itemize if you have enough in deductions to exceed the standard deduction. See IRS Form 1040 for more information about the new standard deductions.
2017 Tax Law
If you are filing taxes for the 2017 tax year and want to claim a charitable deduction for clothing donations, you must file Schedule A (Form 1040) and itemize your deductions. You are allowed to deduct the value of your clothing contributions only for the tax year in which you made the donation.
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