In our house, we donate all of our unused clothes, shoes and household items to Goodwill. The items are still in good shape, we just don’t find ourselves in need of them anymore, which is why it’s nice to give them a second life. Donating to Goodwill is also a good tax deduction, so those who donate also get a “reward” for their goodwill. In this article we’ll discuss the tax benefits of giving, not to mention how important donating is whether you benefit from it or not.
Charitable Donation Value Guide
Possibly the most difficult part about giving a donation is determining the value of it. This is simple if you are just writing a check to an organization of your choosing, but if you’re donating items it can be a little more difficult. In regards to Goodwill donations, the IRS allows taxpayers to deduct the fair market value of their donations.
Fair market value is the price a buyer would pay for the items. This is an amount that you must come up with yourself; Goodwill does not tell you the value of your donations. To determine the fair market value, you’ll want to take into consideration the condition of the item and what the items will sell for. For example, if Goodwill sells t-shirts for $4 and you donated 20 t-shirts you could put the fair market value at $80. Below are some items and their Goodwill value guide. (Remember to take into consideration the style of clothing too (e.g. a wedding dress would most likely be valued higher than a sun dress.)
- Women’s clothing
- Blouse $4-$9
- Pants $4-$23
- Dress $6-$28
- Men’s clothing
- Shirt $4-$6
- Shoes $3-$30
- Jacket $10-$45
- Children’s clothing
- Shirt, pants, sweater $2-$10
- Shoes $3-$10
- Boots $6-$10
What Donations Are Tax Deductible?
Donating to a charitable organization is great because some would say it’s more important to give than to receive. However, you can also get a financial break (ie. tax write-off) by keeping records of your charitable donations. Donations equaling $250 or more require a bank record, payroll deduction records or written acknowledgment from the organization. If the donation is less than $250, a receipt from the organization with the date, amount and organization name on it is sufficient. Below are some examples of donations that are and aren’t tax deductible.
NOT Tax Deductible
This video below has some good tips for how to get the most out of your charitable donations.
Calculate Your Year End Tax Deduction
At the end of the tax year, you should total up your charitable donations in order to maximize your tax write-off. For example, say you contributed the following in one year:
- $300 worth of clothes to Goodwill
- $5,000 to a religious organization
- $100 to a political candidate
- $50 to a family member for their birthday
- $25 to participate in the recreational basketball league
- Used couch to nonprofit school for teacher’s lounge valued at $300
You would be able to write off $5,600 (Goodwill, religious tithing and couch donations) on your taxes. You cannot write-off your contributions to the political candidate, your family member’s birthday or your participation in recreational basketball because those are not tax deductible. Did the basketball surprise you? It is not tax deductible because you are receiving something in return for your payment — you are paying to participate in the basketball league.
Got something you’d like to write off but you’re not sure if it qualifies?