That clothing packed away in your attic could be worth hundreds or even thousands of dollars in tax deductions, much more than it would bring at a garage sale. Simply donate the clothes to a charity, such as Goodwill Industries or the Salvation Army.
According to IRS rules, you are allowed to deduct the fair market value of clothing—the amount that it would sell for in a thrift or consignment store. Trouble is, most taxpayers assign lower values to their donated clothing—and pay higher taxes as a result.
Below is a sampling of fair-market values of common used clothes based on nationwide thrift and consignment store prices. You also can find fair-market values at charity websites, including www.goodwill.org and www.salvationarmyusa.org. When donating your clothes, write up a list of all the items, with fair-market value assigned to each one. Get your list signed and dated by the charity.
Important rules: You must file Form 8283, Noncash Charitable Contributions, with your taxes if you claim property donations of more than $500 in a year. An independent appraisal is required if your noncash donations total more than $5,000. Your charitable-contribution deductions cannot exceed 50% of your Adjusted Gross Income (AGI) (in certain instances, the limitation is limited to 38% or 20% of AGI) in any year. If they do, the excess can be applied to future tax years, generally for up to five years.