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Tax question regarding Goodwill donations

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Hating the environment since 1994
    • I've donated quite a bit of clothing items to Goodwill this past year and am not sure how much I am able to write off.

    I've donated about 11 trashbags worth of clothing but don't know what monetary value to place on the items of clothing.

    As someone who's seen the horrors of an audit first-hand, I don't want to over or underestimate the value of said items.

    Any help is appreciated.
     
    Forbes: The New Rules of Giving

    $2 a pair for underwear, if you're Bill Clinton... :biggrin:

    [...]

    Household goods. Lower-value stuff donated after Aug. 17 [2006] must generally be in good condition or better to qualify for a tax break. (Take pictures to prove it is.) You can claim a tax break for an item that isn't in good condition if it's worth more than $500 and if you get an appraisal of its value before filing your tax return. (Under the pre-Aug. 18 rules you needed an appraisal only if an item was worth $5,000 or more.) Given the $50 to $250 an hour appraisers charge, and new, tougher penalties for overvaluing items, you might be better off selling used furniture at a tag sale and donating the resulting cash to a good cause.

    But note: There are items worth neither selling nor deducting that might be useful to the right charity. The Salvation Army wants used clothing, regardless of condition. If clothes aren't nice enough to go to needy families, the Army bales and sells them as rags at 6 to 10 cents a pound.

    Congress also gave the IRS authority to deny deductions for items of "minimal monetary value"--such as socks and underwear--donated after Aug. 17, even if they're in good condition. (On his 1986 return, Bill Clinton deducted $6 for three pairs of underwear and $75 for a suit with ripped pants given to the Salvation Army.) The IRS is promising guidance on these provisions by year-end. It's possible that even new items of small value won't qualify for a deduction, warns Akin Gump partner Donald Alexander, a former IRS commissioner who represents Goodwill Industries. So bypass the Boy Scout collections of toys and canned food. Send a check instead.

    cont'd...
    Click to expand...
     
    Upvote 0
    GOODWILL

    There is a .PDF file at the link the gives a price per item for various items, but there's no defined formula for calculating it.

    I'd just estimate conservatively on what the actual contents of the bag were and how much each item is worth. Even if you were to be audited, at the very least you'd have a receipt for 11 bags and can explain how you got the figure you used.

    EDIT - also, the guidelines by the IRS have recently been revised to note that deductions are only valid for items in "good or better used" condition. No real way of determining condition or value afterwards, so take that into account, too. Non-cash contributions (especially auto donations) have been an area where they are trying to crack down.....yeah, that's the most important thing they have to worry about. :roll1:
     
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    Upvote 0
    Bucky Katt;1039899; said:
    GOODWILL

    There is a .PDF file at the link the gives a price per item for various items, but there's no defined formula for calculating it.

    I'd just estimate conservatively on what the actual contents of the bag were and how much each item is worth. Even if you were to be audited, at the very least you'd have a receipt for 11 bags and can explain how you got the figure you used.

    EDIT - also, the guidelines by the IRS have recently been revised to note that deductions are only valid for items in "good or better used" condition. No real way of determining condition or value afterwards, so take that into account, too. Non-cash contributions (especially auto donations) have been an area where they are trying to crack down.....yeah, that's the most important thing they have to worry about. :roll1:
    Click to expand...

    I tried to look up values last year but the IRS was very vague but I just got back from dropping 4 more bags off and the lady said that the IRS was required to be much more straightforward in their values and said something like 9 months ago they were forced to upgrade their figures and told me to visit the IRS website as they should now have more accurate figures.

    Thanks for all of the input!!
     
    Upvote 0
    It's a pain.. but I make a very detailed list of what I include in those bags...
    qty, item desc, and condition...
    then I hand it to my CPA for taxes...
    and let him determine the value...
    he's the one that will fight with the IRS in an audit

    Thump, you're in a different situation potentially... if your audit turned up ANYTHING... ANYTHING... then you are probably 10X more likely for another audit... but if they found NOTHING... you may be back in the very small fraction of those audited... Contributions are VERY RARELY the reason for an audit...
     
    Upvote 0
    NJ-Buckeye;1040040; said:
    It's a pain.. but I make a very detailed list of what I include in those bags...
    qty, item desc, and condition...
    then I hand it to my CPA for taxes...
    and let him determine the value...
    he's the one that will fight with the IRS in an audit

    Thump, you're in a different situation potentially... if your audit turned up ANYTHING... ANYTHING... then you are probably 10X more likely for another audit... but if they found NOTHING... you may be back in the very small fraction of those audited... Contributions are VERY RARELY the reason for an audit...
    Click to expand...


    The audit wasn't mine, but rather a close friend of mine.
     
    Upvote 0
    The answer to this and almost any tax question is it depends.

    The way I look at it is, it really isn't worth the IRS time to prosecute people over non cash contributions unless they are way over the top. That is. The IRS probably won't ever really care if you say that you gave $150 worth of clothing to Goodwill or $100 worth of clothing to goodwill. It is nearly impossible for either party to say one way or another.

    What does set off the flag in the IRS audit system is when your charitable deductions cross a certain percentage of your AGI. Then they will look closely at what you claim, and non cash contributions is where they will more than likely win.

    The question you have to ask yourself is, how comfortable are you with the deduction should you get a nasty gram from the IRS.

    On another note, there was a significant change to the code re: the infamous auto contribution. It used to be that you could get the car appraised, give it to the charity and write it off.

    Now that ain't the case quite so much. You actually have to wait for the charity to either sell the car, or to put it to use.

    If they put it to use- then (and I am a little fuzzy on this right now) you get the appraised value of the car for your deduction.

    If they sell it, you get what they sell it for, and they should provide you a receipt.

    The key is that you can't make that claim until they do one or the other. So right now you get these commercials on TV/Radio about how you can get a tax break for donating your car to charity. Well, now you have to wait for them to actually sell it to get anything.

    The phrase that gets me everytime is "deductible to the fullest extent of the law"

    Everything is deductible to the fullest extent of the law. That amount more often than not though tends to be 0.00.
     
    Upvote 0
    Bucky Katt;1039899; said:
    GOODWILL

    There is a .PDF file at the link the gives a price per item for various items, but there's no defined formula for calculating it.

    I'd just estimate conservatively on what the actual contents of the bag were and how much each item is worth. Even if you were to be audited, at the very least you'd have a receipt for 11 bags and can explain how you got the figure you used.

    EDIT - also, the guidelines by the IRS have recently been revised to note that deductions are only valid for items in "good or better used" condition. No real way of determining condition or value afterwards, so take that into account, too. Non-cash contributions (especially auto donations) have been an area where they are trying to crack down.....yeah, that's the most important thing they have to worry about. :roll1:
    Click to expand...

    Keep mouthing off and maybe the IRS will decide to inquire into this:

    Points: 1,248,613.88
    Bank: 0.00
    Total Points: 1,248,613.89
     
    Upvote 0
    methomps;1040282; said:
    Keep mouthing off and maybe the IRS will decide to inquire into this:

    Points: 1,248,613.88
    Bank: 0.00
    Total Points: 1,248,613.89
    Click to expand...

    The vBank is not vFDIC insured. Duh.

    Deety;1040290; said:
    He'll cover up the evidence when he prepares the vStatements for everyone's vInterest and vBookie winnings.
    Click to expand...

    No comment.
     
    Upvote 0
    Link1

    Clothing and Household Items

    You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better...

    Fair market value. To determine the fair market value of these items, use the rules under Determining Fair Market Value, later.
    Click to expand...

    Determining Fair Market Value

    This section discusses general guidelines for determining the fair market value of various types of donated property. Publication 561 contains a more complete discussion.
    Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.

    Used clothing. The fair market value of used clothing and other personal items is usually far less than the price you paid for them. There are no fixed formulas or methods for finding the value of items of clothing.
    You should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops...
    Click to expand...

    Publication 561
     
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