- You will need to choose a tax-exempt, nonprofit organization to accept your clothing donation. It can be either a religious or charitable organization. Not all organizations are approved to accept charitable donations, so check with the IRS to confirm the charity's status. The IRS releases a list of organizations that have lost their tax-exempt statuses, and this list is updated periodically as statuses change.
- When declaring a clothing donation, keep in mind that you will need to claim the itemized deduction rather than the standard deduction. To benefit from itemizing your deductions, make sure the total of all your deductions is higher than the standard deduction amount allowed based on your filing status. You cannot not claim a clothing deduction valued higher than half your gross income. If you donate more than a total of $500 worth of clothing or other goods to charities, you will need to complete and include Section A of Form 8283: Non-Cash Charitable Contributions with your federal tax return.
- There is no formula or guideline that specifies how charities are to determine the fair market value. The fair market value is generally what a knowledgeable, willing buyer would pay for the item. You can compare your clothing to similar pieces sold at yard sales, thrift stores or online resale sites.
- Receipts are required for all clothing donations valued at over $250. It is a good idea to maintain a copy of the receipt, regardless of the donation amount. Make sure you receive a receipt with information about the donation. The IRS has not created a standard donation receipt; however, certain information is required. The receipt should include the donor's name, a description of the donation and the date the donation was made. It should also state whether or not goods or services were provided in exchange for the clothing donation.