Get A Tax Deduction For Unwanted Clothing and Household Items

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J. Steven Tucker

J. Steven Tucker is a Certified Public Accountant. He has had his own CPA practice in Winston Salem NC since 1987. His areas of practice include financial planning as well as tax planning. Also, for several years now, he has been trading commodities.

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At this time of the year, a lot of us like to go through our closets, gather up the clothes we don't need, and bundle them up to take to organizations like Goodwill Industries or the Salvation Army. We may also want to donate other household items we don't need. This helps us to get organized for the coming year, make a charitable contribution, and possibly even give us another tax deduction. However, to be able to benefit from a tax deduction, you need to keep the following rules in mind.

First of all, keep in mind that unless you can itemize your deductions, you can't take any charitable contributions deductions at all. But, assuming you are going to be able to itemize your deductions, you can deduct contributions of clothing and household items at their fair market value. Now the IRS has a new rule that says that clothing or household items you donate must be in good used condition or better. Now, I don't have any idea how a taxpayer is going to prove to the IRS that any items he or she donates is in good used condition or better, but that is what the rules say.

According to the IRS, household items include the following property:

*Furniture
*Furnishings
*Electronics
*Appliances
*Linens, and
*Other similar items

Household items do not include:

*Food
*Paintings, antiques, and other objects of art
*Jewelry and gems
*Collections

For any non-contributions of less than $250, you must get a receipt for the charitable organization that shows the following:

*The name of the charitable organization,
*The date and location of the charitable contribution, and
*A reasonably detailed description of the property.

Now the charitable organization will usually not put a value on a receipt. It will be up to you to determine the value of the clothing and household items that you donate. However, keep in mind that the fair market value of any used clothing or household items is usually very small compared with the retail price. The IRS says that you should value each donated item at what a similar item would cost in a thrift store. But, I think its reasonable to use a figure of 15 to 20% of what the item originally cost at retail.

If your total non-cash contributions are more than $500, you'll need to fill out Form 8283 when you file your tax return. On this form you'll have to provide more detailed information on each of your non-cash charitable contributions, such as the date of the contribution, the original purchase price, the fair market value, and the method of calculating the fair market value.

Keep in mind that your non-cash charitable contributions must be to a qualified charitable organization in order to qualify for the deduction.