Condition and Fair Market Value

• The IRS requires that any clothing or household items donated to a charitable organization be in good used condition or better. This requirement aims to discourage individuals from claiming a deduction for the donation of heavily worn or damaged items at the end of their useful life. In addition, the deduction for all donated items is limited to the fair market value of the items. For used clothing, this is typically well below the initial purchase price. Typically, thrift store value, or the reasonable resale value of the clothing establishes fair market value.
  
  

Substantiation -- Donations Less Than $250

• For non-cash charitable contributions, the IRS requires four separate levels of substantiation, dependent upon the amount of the claimed deduction. For donations of less than $250, a receipt from the qualified charitable organization is usually necessary. This receipt must show the name of the charitable organization, the date of the donation and a reasonably detailed description of the items donated. In instances where it is impractical to obtain a receipt, however, this requirement is not required. This exemption may apply if, for example, you leave the clothes at a charitable drop box.
  
  

Substantiation -- Donations of $250 or More

• For donations of $250, a receipt from the qualified charitable organization is always mandatory. In addition to the requirements that the receipt must show the name of the charitable organization, the date of the donation and a reasonably detailed description of the items donated, the receipt must also contain a statement vouching that no goods or services were received in exchange for the donation and a good faith estimate of the value of the items donated. It is important to note that this receipt must show a date no later than the date you filed your individual income tax return or the due date of the return. This requirement prevents taxpayers from obtaining substantiation after receiving IRS requests for additional documentation.
  
  

Qualified Charitable Organizations

• Not all charitable organizations accepting clothing donations qualify the taxpayer for an income tax deduction. Organizations must be formally recognized by the IRS. Although taxpayers may donate to non-qualified organizations, they may not claim a tax deduction for the fair market value of their donations. The IRS maintains a current list of all qualified organizations on its website.