Alert: U.S.-specific post
Disclaimer: I am not a tax accountant; please consult with yours.
Yes, I know we just passed the tax filing date for 2007. But if you decide to clear out your clothes closet as part of your spring cleaning, you might want to track those donations and get them valued properly for tax purposes.
The IRS provide minimal guidance in this regard. In Publication 561, it says:
Used clothing and other personal items are usually worth far less than the price you paid for them. Valuation of items of clothing does not lend itself to fixed formulas or methods.OK, so that helped a lot, right?
The price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops, is an indication of the value.
You cannot take a deduction for clothing donated after August 17, 2006, unless it is in good used condition or better.
Some organizations such as The Salvation Army and Goodwill provide some limited donation valuation information - but many people will want more guidance than that.
Perhaps the most well-known option is ItsDeductible, the free on-line valuation program from Intuit that feeds into TurboTax. I just tried using it, and it seemed pretty easy. Valuations are based on data from resale stores across the United States and from eBay.
While it appeared, at first, that you could use this program without also using TurboTax, it seems that might not be true, given this statement from the web site:
ItsDeductible provides "old" values that can be used to "estimate" your item values throughout the year. These "estimated" item values will be updated automatically when you import and use them in TurboTax at tax time.However, at the NAPO conference, I became aware of another option. To appreciate this other option, let's look at a bit of history regarding ItsDeductible.
ItsDeductible used to come in a workbook form, but it no longer does.
And before it became part of Intuit, it was written by William Lewis, and was titled ItsDeductible: Cash For Your Used Clothing.
Now Mr. Lewis is publishing a book called Money for Your Used Clothing, which provides donation valuations for all sorts of clothing - and more. Valuations are based on annual surveys of consignment and thrift stores throughout the United States.
And yet another option might be DeductionPro, from H&R Block. I found out about this from a good article in The Charleston Gazette that's well worth a read.