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Tax Audit Reviews: Be Careful When Deducting Clothing Donations on Your Taxes

February 20, 2020 by Ian Leave a Comment

So, you’ve got a huge bag of clothes you’re thinking about donating to a charity during the holiday season. The great thing about making a charitable contribution is that your charity isn’t the only party who benefits: You also benefit at tax time. However, deducting too much on your taxes for your donated clothes can get you into a heap of trouble with the Internal Revenue Service (IRS), according to recent tax audit reviews.

The reality is, charity donors often over-value donations that are not cash, especially donated clothes. This is because they usually focus on what they actually paid for the clothing, not what it is truly worth today. A $50 sweater that you bought two years ago might be worth only a small fraction of that now.

Still, you may be tempted to assign a generous value to your clothing now that the standard deduction is almost double what it was for married and single taxpayers prior to the 2018 tax reform (it was $24,400 for married couples and $12,200 for single taxpayers). After all, donating clothing or other household goods might push you across the threshold and thus allow you to itemize. This means you can take even bigger deductions.

However, if you want to avoid getting into trouble with the IRS during an audit, it’s best that you assign your donated clothing a fair market value. Fortunately, the Salvation Army and Goodwill can give you value ranges for various household items—for example, between $4 and $9 if you’re donating a blouse. You can also look at thrift stores or online marketplaces to see what your type of clothing is being sold for in these areas. The more accurate your pricing is, the less likely you are to raise red flags with the IRS in the years ahead.

 

Filed Under: Lifestyle

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Hey! I am Ian, the editor of Tag World- an online magazine. I spend a lot of my time learning, writing, and reading.

During the day, I work downtown in an advertising/business office with an amazing group of individuals who like to have fun but who also work great together as a team when it comes to getting big and creative projects done.

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about me

Hey!

I am Ian, the editor of Tag World- an online magazine.

I spend a lot of my time learning, writing and reading.

During the day, I work downtown in an advertising/business office with an amazing group of individuals who like to have fun but who also work great together as a team when it comes to getting big and creative projects done. During the night, I turn into a full- time blogger; ready to share the experiences and knowledge I can offer. Read more...

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