If you are donating clothing or a household to a non-profit, you may need to determine their worth. It will help you deduct this amount from your taxes as a charitable donation. Indeed coming out with this value isn’t possible just like that!
It is because, in part, there have been valuation abuses of the taxpayers. So, now there are special rules to determine the value of clothing donations. So, if we understand in simple words, other than donations of up to $300, you can deduct charitable contributions while itemizing your deductions in place of the standard deduction.
It means that the number of taxpayers who will itemize the deductions will be lesser. So, you can give them to charities. So, here is the whole idea to learn how to value clothing donations.
Fair Market Value
Analyze the “fair market value.” You can deduct this limit. But, wait, fair market value is in itself a tricky thing! Let be clear on the first note-
For IRS purposes, it will mean that the amount a “willing buyer is likely to pay, and a willing seller would happily accept the property. For example, in a case where neither party is compelled to buy or sell, and both legit parties have good knowledge of the relevant facts.”
In other words, it’s all about a fair price—not too high and not too low.
So, if you are giving clothing donations, and the grant is under $5000, no appraisal is required for determining the fair market value. However, here is a list of relevant factors which needs to be considered:
- The items’ replacement cost
- The original item’s cost or the selling price
- Sales of all comparable items
- Lastly, an expert opinion
Plus, make sure that the donated clothing items are in usable form. The condition should be good to use for the people in need. Indeed, no rule specifies the clothing donations as: in good condition or not!
But, at the same time, you may find some of the non-profits which guidelines for clothing donations. For instance, the Salvation Army will only accept clothes that are not torn or dirty. Indeed, broken items are not accepted for further assistance or help to the poor. Moreover, one more example in the list of Goodwill Industries! It states that the clothing donation should be given as you give to relatives and friends. Therefore, it should be in good form and appropriate to donate to people.
Online Valuation Guide
Yes, the well-known non-profits have evaluated valuation guidelines for clothing donations. It is also applicable for different household goods. The two main approaches which you can follow are:
- Salvation Army Donation Value Guide
- Goodwill Industries
For Salvation Army donations, you can follow the below link to knowing the value of clothing donations to the organization. Click here- https://satruck.org/Home/DonationValueGuide#mens-clothing.
Yes, the Salvation Army Guide is the most detailed one. And we suggest you follow the same, for better chances of understanding the value of clothing items. Now comes the two terms, which are related to the valuation of clothing and household items.
Tax-preparation software! It includes H&R Block’s Tax Cut and Intuit’s TurboTax. The best part is it can provide donors with estimated values for clothing and other household goods. Indeed, it is completely based on the condition of each item. First, you will describe the item being donated, and then, the program gives an estimate of its value. The calculation is based on surveys of online auctions and thrift stores.
Further, a comparison of the results obtained using all these programs plus the price guides created by non-profits effectively says that the software usually gives higher valuations.
Past sales of similar items.
It is the prices obtained in the past for the sale of similar items. Yes, they are always a good indicator of clothing and household value. Good evidence of importance is the price at which similar items are sold in significant thrift stores, such as Goodwill Industries and Salvation Army Family Stores. Plus, online auction sites, for instance, eBay, can also guide what used items are valuable and worth. Indeed, you may also check to see what similar items are generally sold for and use the recent sales price.
Knowing the evaluation with the detailing is beneficial in the longer run. While you are donating clothing and household items to the needy, make sure you are doing justice with the way you approach. With the above tips, you will be able to decide the correct value for your donations.
So, what are you waiting for? Apply our tips to know how to value clothing donations work now!