I am giving my designer suits to charity. How much can I deduct?

July 02, 2014 by Dave Du Val, EA
Dress Shirts

Hey Dave,

Could you advise on how the value of items is determined for charitable contributions? I am about to donate several of my designer suits to charity.

Lara

 

Lara,

As a general rule, you would use the fair market value of the items. 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.

Since the rules and guidelines vary by property type, your best bet would be to review the section titled Determining Fair Market Value in IRS Publication 526.

The IRS frequently questions deductions for items that appear to be overvalued, which is why we strongly recommend that you document your valuations with photographs, detailed lists of the specific items you donated, canceled checks, receipts from your purchase of the items, or other evidence, such as website information or magazine articles.

Some versions of TurboTax include the “It’s Deductible” feature, and there is also an “It’s Deductible” app that helps with charitable contribution valuations. Both Goodwill and the Salvation Army also have valuation estimates on their websites for common items such as clothing and household appliances.

The important thing is to keep your value estimates reasonable. Even if you are addicted to designer suits, they generally have very little fair market value in the thrift store market.

Deductibly Yours,

Dave

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David E. Du Val, EA
Chief Compliance Officer for TRI Holdco

 

Dave Du Val, EA, is Chief Compliance Officer for TRI Holdco. Inc., the parent company of TaxAudit, and Centenal Tax Group. A nationally recognized speaker and educator, Dave is well known for his high energy and dynamic presentation style. He is a frequent and popular guest speaker for the California Society of Tax Consultants, the California Society of Enrolled Agents and the National Association of Tax Professionals. Dave frequently contributes tax tips and information to news publications, including US News and World Report, USA Today, and CPA Practice Advisor. Dave is an Enrolled Agent who has prepared thousands of returns during his career and has trained and mentored hundreds of tax professionals. He is a member of the National Association of Tax Professionals, the National Association of Enrolled Agents and the California Society of Enrolled Agents. Dave also holds a Master of Arts in Education and has been educating people since 1972. 


 

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