Many people depend on the low prices offered by organizations such as the Salvation Army and Goodwill for clothing purchases. In order to offer used clothing, these organizations rely on donations from people like you throughout the year. Instead of throwing out your old clothing, donate the clothes and deduct the price of the donation from your federal income taxes.
Create a comprehensive list of all used clothing you plan to donate. The list should include a physical description of the clothing, its original purchase price and approximate date of purchase. Leave additional space for the approximate fair market value. If you plan to deduct the total donation from your taxes later, the list serves as evidence to support your donations in the event of an audit.
Reference the Salvation Army, Goodwill or Internal Revenue Service Publication 526 for details regarding the value of your used clothing (see Resources). The Salvation Army and Goodwill provide approximate values of certain clothing for pricing purposes. For example, Goodwill estimates that a used men's T-shirt is valued somewhere between $1 and $6. The value depends on the material and design quality of the shirt and its condition. Use moderation when pricing your clothing. If all of your used clothing is priced at the top resale value, the IRS may investigate. Write the fair market value next to each item on the list you created previously.
Ask for a receipt if you go to the store yourself to donate the clothing. Organizations such as Goodwill and the Salvation Army provide receipts with the approximate value of larger clothing donations. If you donate used clothing totaling $500 or more, you need to fill out IRS form 8283. A legitimate donation receipt shows that all of your donations are accounted for and recorded correctly in the event the IRS investigates your deduction claim. Receipts also guide your pricing methods for future clothing donations.
If you intend to donate $5,000 or more in clothing and plan to deduct the donation on your taxes, an appraiser must look over the lot beforehand. The appraiser creates and sign a document verifying the value of the clothing. You are allowed to hire your own appraiser.
Aaron Marquis is a University of Texas graduate with experience writing commercials and press releases for national advertising agencies as well as comedy television treatments/stories for FOX Studios and HBO. Marquis has been writing for over six years.