How To Estimate Value Of Clothing For Irs Deductions

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If you aren’t participating in some type of strategy to minimize the amount of taxes that you pay each year, you could be missing out. The Internal Revenue Service allows you to deduct certain items from your taxes that can help minimize the total amount you owe. One of these deductions is your donations to charitable organizations and mileage you drive that is related to charitable activities. While the IRS does provide you with a method to calculate your miles, they do not state the specific value that you can deduct for some charitable donations — that includes clothing. Here are tips on how you can determine a value for clothing donations and take advantage of this type of deduction.

How To Prepare

If you plan on deducting clothing donations on your taxes, the first step that you need to take before donating your clothing is to separate each item into categories that are similar. If you are donating men’s dress shirts, blue jeans, women’s casual skirts and baby clothing, you would list each item in its appropriate category with a short description. You must have a detailed list to back up your receipts. One quick way to prove that you made clothing donations is by taking pictures of each item. This will also help you solidify value for each item as your pictures will prove the quality of the items that you donate.

In addition to categorizing each garment, you’ll need to collect receipts from each charitable organization. Unfortunately, charitable organizations do not assign values for the clothing that you donate. You must determine this value and have it listed on your receipts. Be aware that you must have receipts as proof of your donations if you ever get audited. You could end up losing your deduction and face paying a penalty without them.

Use Thrift Store Values

Fortunately, most thrift stores will provide some type of chart that lists an approximate value for major clothing categories. It will usually include a high and low range for each category. You can use these charts to assess values for each piece of clothing that you donate. It’s your responsibility to determine if your clothing should be valued at the high or low end of each range. Record that value and use it when you are preparing your federal income tax form 1040.

Recording Clothing Donations

If you make donations that are over $500, the IRS requires you to use Form 8283. When you use this form, you will combine the total value of the property that you donated in the last fiscal year. These donations must be given to organizations that are allowed by the IRS. Publication 78 will provide you with a list of charitable institutions that qualify for this deduction.

While you are not required to report donations to the IRS, it is a good way to save on your taxes if you do make a large enough donation. Keep this in mind throughout the year so that you are prepared for next tax season.