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Taxes - Goodwill donations, older children's clothing

Posted: Tue Oct 08, 2019 2:17 pm
by psteinx
In years past we've claimed modest (<$500 per donation, perhaps $100-400/year) deductions for donations of clothing (and misc. used items) to Goodwill and the like. This stuff has been a mixture of stuff for the parents and stuff for the kids (i.e. kids' clothing books, etc.).

It has occurred to me that our kids are older, and this may present a problem accurately claiming the deduction. Conceivably, it's even wrong when the kids are rather young.

Does anyone know (preferably with a source) whether it's acceptable for parents to claim deductions for donations of their kids' stuff (primarily bought by the parents, but some was presumably gifts from grandparents or bought with the kids' own money [edit - or the like]) if:

Kids < 18
Kids 18+, but still dependents (i.e. in college)

?

Re: Taxes - Goodwill donations, older children's clothing

Posted: Tue Oct 08, 2019 2:34 pm
by Gill
I've never heard of this issue coming up. I would take the position that your children gave you the stuff to donate. Really, you are asking how many angels can dance on the head of a pin. No need to be "Holier than the Pope".
Gill

Re: Taxes - Goodwill donations, older children's clothing

Posted: Tue Oct 08, 2019 2:45 pm
by RickBoglehead
Yeah, I never heard of this either. We've always donated on our behalf whatever was in our home, regardless of who bought it.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Tue Oct 08, 2019 2:51 pm
by LilyFleur
RickBoglehead wrote:
Tue Oct 08, 2019 2:45 pm
Yeah, I never heard of this either. We've always donated on our behalf whatever was in our home, regardless of who bought it.
I think it's OK. I just made a HUGE donation of clothing to Goodwill, from an adult child, but I had actually paid for most of the items over the years. I photographed all of it, and then I counted it and valued it on the very low end (using the Goodwill Fair Market calculator).
https://goodwillnne.org/donate/donation-value-guide/

Re: Taxes - Goodwill donations, older children's clothing

Posted: Tue Oct 08, 2019 3:20 pm
by PVW
If your kids are like most, their stuff can probably be classified as abandoned property. It becomes the property of the finder, and you're free to donate it.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Tue Oct 08, 2019 3:37 pm
by oldfatguy
If you sold the items at a yard sale, would you give the money to the kids?

Re: Taxes - Goodwill donations, older children's clothing

Posted: Tue Oct 08, 2019 3:47 pm
by Stinky
Document
Donate
Deduct

I’ve done this for a couple of decades with kids and family stuff. Never a tax problem.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Tue Oct 08, 2019 4:05 pm
by 123
I doubt that a parent would allow most children to sell their clothing, keep the proceeds, and use it for whatever they want. So that tells me that the child doesn't really own their clothing. Additionally in the standard practice of hand-me-downs it is the parent who passes the clothing, whether to another child in the same household or to a neighbor. So it seems to me that the parent is the default owner of the child's clothing, absent evidence of some other ownership arrangement between the parent and the child.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Tue Oct 08, 2019 7:02 pm
by c1over8
This wasn't your question, but an interesting case to consider regarding substantiation if you are taking a deduction for donations to Goodwill:
https://www.thetaxadviser.com/issues/20 ... enied.html

Re: Taxes - Goodwill donations, older children's clothing

Posted: Tue Oct 08, 2019 9:35 pm
by LilyFleur
c1over8 wrote:
Tue Oct 08, 2019 7:02 pm
This wasn't your question, but an interesting case to consider regarding substantiation if you are taking a deduction for donations to Goodwill:
https://www.thetaxadviser.com/issues/20 ... enied.html
Wow. My Goodwill hands me a blank receipt that is signed and dated. It's up to me to fill it out. Then again, I am not donating thousands of dollars of clothing.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Tue Oct 08, 2019 9:42 pm
by fru-gal
Stuff that's sold at thrift stores is priced at practically nothing, like $1 or $2 for a shirt. I would use that as a guideline when claiming a deduction.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Wed Oct 09, 2019 7:48 am
by wolf359
Did you even itemize deductions last year?

In order to claim charitable donations on your taxes, you need to itemize. The standard deduction almost doubled last year. It was the first year I didn't itemize in years, so my normal strategies for tracking and claiming charitable donations went out the window. (I still donated, but it made no difference on my taxes.)

Re: Taxes - Goodwill donations, older children's clothing

Posted: Wed Oct 09, 2019 8:23 am
by 7eight9
fru-gal wrote:
Tue Oct 08, 2019 9:42 pm
Stuff that's sold at thrift stores is priced at practically nothing, like $1 or $2 for a shirt. I would use that as a guideline when claiming a deduction.
if you follow Goodwill's valuation guidelines at least you won't be that person whose used skivvies are washed in public (at $2/pair circa 1986 tax return) when you run for higher office. :happy

Valuation Guide for Goodwill Donors --- https://www.goodwill.org/wp-content/upl ... _guide.pdf

Re: Taxes - Goodwill donations, older children's clothing

Posted: Wed Oct 09, 2019 8:40 am
by Nowizard
To claim this deduction, you, of course, will need to itemize. TurboTax has an included program called "It's Deductible" that allows entry of items and assignment of a deductible amount for each item based on the condition of the item. We use it though it does require time to enter each item if there are many. That combined with the receipt you receive when making the donation comprise documentary evidence of the deduction. We have not made a distinction between purchased items and those received as possible gifts. Many people do this a number of years after the item was received and no longer have the actual receipt from the time of purchase since the item may be something like a dining room table purchased twenty or more years ago.

Tim

Re: Taxes - Goodwill donations, older children's clothing

Posted: Wed Oct 09, 2019 8:43 am
by White Coat Investor
psteinx wrote:
Tue Oct 08, 2019 2:17 pm
In years past we've claimed modest (<$500 per donation, perhaps $100-400/year) deductions for donations of clothing (and misc. used items) to Goodwill and the like. This stuff has been a mixture of stuff for the parents and stuff for the kids (i.e. kids' clothing books, etc.).

It has occurred to me that our kids are older, and this may present a problem accurately claiming the deduction. Conceivably, it's even wrong when the kids are rather young.

Does anyone know (preferably with a source) whether it's acceptable for parents to claim deductions for donations of their kids' stuff (primarily bought by the parents, but some was presumably gifts from grandparents or bought with the kids' own money [edit - or the like]) if:

Kids < 18
Kids 18+, but still dependents (i.e. in college)

?
It's fine. I keep track on its deductible. I just dropped off $12K worth of clothing and similar stuff in the last couple of months and will be donating thousands more in appliances, windows, fixtures etc.

Neither the charity nor the IRS care where the stuff came from, whose it was, or who it was bought for. they don't even care what you paid for it. You can buy from Goodwill for cheap and then return it to Goodwill for a deduction if you like. Your deduction is supposed to be what they can sell it for, but as you might imagine, there is a great deal of gray area there. I think ItsDeductible estimates a little high most of the time, but also surprisingly low sometimes.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Wed Oct 09, 2019 8:52 am
by Shallowpockets
12k of clothing to Goodwill????
Must be a lot of fudging numbers on that.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Wed Oct 09, 2019 11:47 am
by MarkNYC
White Coat Investor wrote:
Wed Oct 09, 2019 8:43 am
I keep track on its deductible. I just dropped off $12K worth of clothing and similar stuff in the last couple of months and will be donating thousands more in appliances, windows, fixtures etc.
Be careful. When claiming a charitable deduction for any group of similar items, such as clothing, where the deduction value exceeds $5,000, a qualified appraisal of the goods is required for the deduction to be valid.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Wed Oct 09, 2019 3:52 pm
by White Coat Investor
MarkNYC wrote:
Wed Oct 09, 2019 11:47 am
White Coat Investor wrote:
Wed Oct 09, 2019 8:43 am
I keep track on its deductible. I just dropped off $12K worth of clothing and similar stuff in the last couple of months and will be donating thousands more in appliances, windows, fixtures etc.
Be careful. When claiming a charitable deduction for any group of similar items, such as clothing, where the deduction value exceeds $5,000, a qualified appraisal of the goods is required for the deduction to be valid.
Who's going to appraise a big stack of clothes? Who would you even call?

More importantly, who do I call to appraise all of the cabinets, fixtures, windows, and appliances I'm donating to habitat for humanity this month?

Re: Taxes - Goodwill donations, older children's clothing

Posted: Wed Oct 09, 2019 3:53 pm
by White Coat Investor
Shallowpockets wrote:
Wed Oct 09, 2019 8:52 am
12k of clothing to Goodwill????
Must be a lot of fudging numbers on that.
Pretty amazing right? Would you like to see the itemized list? It's quite long.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Wed Oct 09, 2019 4:19 pm
by White Coat Investor
So I looked it up in the IRS Publication:
Appraisals
Appraisals are not necessary for items of property for which you claim a deduction of $5,000 or less. There's an exception for clothing over $500....

Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5,000, you must get a qualified appraisal made by a qualified appraiser, and you must attach Section B of Form 8283 to your tax return.
I guess it comes down to how "similar" is defined. If similar is girl's shirts, then I'm fine. If similar is "women's clothing" then I'm fine. If similar is "clothing" then I guess I should have found an appraiser and had them spend a few hours going through the bags before I dropped them off.

I think I'll be okay with the household items because I don't think I'll have more than $5,000 of any one category (i.e. cabinets, fixtures, appliances, windows etc). For example, the deduction for all of my kitchen cabinets is only like $700 according to ItsDeductible.

Clothing is the only place I could get burned. I guess if the IRS demands Form 8283 then I'll just lose that deduction.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Wed Oct 09, 2019 5:53 pm
by MarkNYC
White Coat Investor wrote:
Wed Oct 09, 2019 4:19 pm
So I looked it up in the IRS Publication:
Appraisals
Appraisals are not necessary for items of property for which you claim a deduction of $5,000 or less. There's an exception for clothing over $500....

Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5,000, you must get a qualified appraisal made by a qualified appraiser, and you must attach Section B of Form 8283 to your tax return.
I guess it comes down to how "similar" is defined. If similar is girl's shirts, then I'm fine. If similar is "women's clothing" then I'm fine. If similar is "clothing" then I guess I should have found an appraiser and had them spend a few hours going through the bags before I dropped them off.

I think I'll be okay with the household items because I don't think I'll have more than $5,000 of any one category (i.e. cabinets, fixtures, appliances, windows etc). For example, the deduction for all of my kitchen cabinets is only like $700 according to ItsDeductible.

Clothing is the only place I could get burned. I guess if the IRS demands Form 8283 then I'll just lose that deduction.
Jim,

All types of clothing would be a similar category, and the tax court has ruled that the category of "household items" includes furniture, furnishings, electronics, appliances, and linens. (google: non-cash charity similar items) If you haven't yet made the donation of household items, you might want to consider spreading the donations over 2 or more years so that you don't exceed $5K for any one year.

Form 8283 is required to be included with the 1040 for any year that non-cash donations exceed $500. Leaving aside the appraisal requirement issue, claiming a 5 or 6 figure non-cash charitable deduction without filing Form 8283 is needlessly asking for trouble.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Wed Oct 09, 2019 6:04 pm
by unclescrooge
LilyFleur wrote:
Tue Oct 08, 2019 9:35 pm
c1over8 wrote:
Tue Oct 08, 2019 7:02 pm
This wasn't your question, but an interesting case to consider regarding substantiation if you are taking a deduction for donations to Goodwill:
https://www.thetaxadviser.com/issues/20 ... enied.html
Wow. My Goodwill hands me a blank receipt that is signed and dated. It's up to me to fill it out. Then again, I am not donating thousands of dollars of clothing.
I cleaned house last year. Between the clothes/shoes that generated $2-$15 each, baby gear and electronics, we made out with nearly $500 in deductions. If I had claimed the amount I had paid, it would easily have been $10,000.
Did I short change myself, it was the IRS just lenient in this story?

Re: Taxes - Goodwill donations, older children's clothing

Posted: Thu Oct 10, 2019 2:17 pm
by fru-gal
White Coat Investor wrote:
Wed Oct 09, 2019 3:53 pm
Shallowpockets wrote:
Wed Oct 09, 2019 8:52 am
12k of clothing to Goodwill????
Must be a lot of fudging numbers on that.
Pretty amazing right? Would you like to see the itemized list? It's quite long.
Yes I would actually :-) just out of curiosity. My first thought was, we certainly live in different economic strata :-)

Re: Taxes - Goodwill donations, older children's clothing

Posted: Thu Oct 10, 2019 4:16 pm
by JBTX
MarkNYC wrote:
Wed Oct 09, 2019 5:53 pm
White Coat Investor wrote:
Wed Oct 09, 2019 4:19 pm
So I looked it up in the IRS Publication:
Appraisals
Appraisals are not necessary for items of property for which you claim a deduction of $5,000 or less. There's an exception for clothing over $500....

Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5,000, you must get a qualified appraisal made by a qualified appraiser, and you must attach Section B of Form 8283 to your tax return.
I guess it comes down to how "similar" is defined. If similar is girl's shirts, then I'm fine. If similar is "women's clothing" then I'm fine. If similar is "clothing" then I guess I should have found an appraiser and had them spend a few hours going through the bags before I dropped them off.

I think I'll be okay with the household items because I don't think I'll have more than $5,000 of any one category (i.e. cabinets, fixtures, appliances, windows etc). For example, the deduction for all of my kitchen cabinets is only like $700 according to ItsDeductible.

Clothing is the only place I could get burned. I guess if the IRS demands Form 8283 then I'll just lose that deduction.
Jim,

All types of clothing would be a similar category, and the tax court has ruled that the category of "household items" includes furniture, furnishings, electronics, appliances, and linens. (google: non-cash charity similar items) If you haven't yet made the donation of household items, you might want to consider spreading the donations over 2 or more years so that you don't exceed $5K for any one year.

Form 8283 is required to be included with the 1040 for any year that non-cash donations exceed $500. Leaving aside the appraisal requirement issue, claiming a 5 or 6 figure non-cash charitable deduction without filing Form 8283 is needlessly asking for trouble.
I've never had 5 figures of donations but have had low 4 figures, much of it clothing. I also use its deductible. I also use turbo tax. I've never had an appraisal, nor would I. I've got the it's deductible itemization, goodwill receipts, and I may take photos of the bags full of clothes. I've never had any trouble. I'll take my chances on the low probability of an audit.

My take is I will usually take a legit deduction regardless of circumstances and will take my chances with the documentation given the low probability of audit.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Thu Oct 10, 2019 5:25 pm
by Artsdoctor
To the OP, you can definitely donate your kids' clothing (or anyone else's). Just document what you're doing. I use "Its Deductible."

Regarding tens of thousands of dollars of used clothing and other various household items, I'd document the heck out of what you're doing as if you're going to be audited. If you don't wind up being audited, then you'll be grateful. In addition to your paper documentation, you might want to take pictures and/or video what you're donating if you're in the 5-digit non-cash camp. Above all, you don't want to wind up in some news story:

https://www.cpapracticeadvisor.com/tax- ... o-goodwill

Re: Taxes - Goodwill donations, older children's clothing

Posted: Thu Oct 10, 2019 5:45 pm
by MarkNYC
Artsdoctor wrote:
Thu Oct 10, 2019 5:25 pm
Regarding tens of thousands of dollars of used clothing and other various household items, I'd document the heck out of what you're doing as if you're going to be audited. If you don't wind up being audited, then you'll be grateful. In addition to your paper documentation, you might want to take pictures and/or video what you're donating if you're in the 5-digit non-cash camp. Above all, you don't want to wind up in some news story:

https://www.cpapracticeadvisor.com/tax- ... o-goodwill
For anyone claiming a deduction in excess of $5K for used clothing or any other group of similar items, the only documentation for valuation that matters is a qualified appraisal of the goods donated. Without that appraisal, the deduction is illegitimate, as explained in the case in the article you linked and the one linked above by clover8.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Thu Oct 10, 2019 10:39 pm
by White Coat Investor
fru-gal wrote:
Thu Oct 10, 2019 2:17 pm
White Coat Investor wrote:
Wed Oct 09, 2019 3:53 pm
Shallowpockets wrote:
Wed Oct 09, 2019 8:52 am
12k of clothing to Goodwill????
Must be a lot of fudging numbers on that.
Pretty amazing right? Would you like to see the itemized list? It's quite long.
Yes I would actually :-) just out of curiosity. My first thought was, we certainly live in different economic strata :-)
Imagine 4 kids and you haven't ever thrown any of their clothes away. The oldest is now 15....

Plus two adults who haven't thrown out any clothing in a decade since their last move.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Thu Oct 10, 2019 10:44 pm
by White Coat Investor
MarkNYC wrote:
Wed Oct 09, 2019 5:53 pm
White Coat Investor wrote:
Wed Oct 09, 2019 4:19 pm
So I looked it up in the IRS Publication:
Appraisals
Appraisals are not necessary for items of property for which you claim a deduction of $5,000 or less. There's an exception for clothing over $500....

Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5,000, you must get a qualified appraisal made by a qualified appraiser, and you must attach Section B of Form 8283 to your tax return.
I guess it comes down to how "similar" is defined. If similar is girl's shirts, then I'm fine. If similar is "women's clothing" then I'm fine. If similar is "clothing" then I guess I should have found an appraiser and had them spend a few hours going through the bags before I dropped them off.

I think I'll be okay with the household items because I don't think I'll have more than $5,000 of any one category (i.e. cabinets, fixtures, appliances, windows etc). For example, the deduction for all of my kitchen cabinets is only like $700 according to ItsDeductible.

Clothing is the only place I could get burned. I guess if the IRS demands Form 8283 then I'll just lose that deduction.
Jim,

All types of clothing would be a similar category, and the tax court has ruled that the category of "household items" includes furniture, furnishings, electronics, appliances, and linens. (google: non-cash charity similar items) If you haven't yet made the donation of household items, you might want to consider spreading the donations over 2 or more years so that you don't exceed $5K for any one year.

Form 8283 is required to be included with the 1040 for any year that non-cash donations exceed $500. Leaving aside the appraisal requirement issue, claiming a 5 or 6 figure non-cash charitable deduction without filing Form 8283 is needlessly asking for trouble.
Oooh...that's problematic. Maybe I'll just claim $4999 then. Seriously though, if they wanted to audit a charitable donation I would hope they'd go for the 6 figure stock donations rather than the five figure clothes and stuff donations. That stuff is much easier to keep documentation for.

I guess I could try to store stuff for a couple of months until 2020, but seems a big hassle. You'd think they didn't want us to donate stuff to charity or something.

Re: Taxes - Goodwill donations, older children's clothing

Posted: Fri Oct 11, 2019 12:09 pm
by Artsdoctor
^ I don't think there's a concerted effort to prohibit you from donating anything. But putting the value on what one donates is open to abuse, or at least ignorance. If someone pays $250 for an item of clothing, they might find it difficult to believe that the fair market value is only $5. We all know someone who has an unrealistic idea of what something is worth that they treasure. In fact, it is well-known that most people have a very inaccurate estimate of what non-cash contributions are worth so this is one area that the IRS is justified in asking for some type of reasonable estimates of "things" donated.

An audit can be generated by many things, and perhaps the accountants (and IRS agents) on the forum can comment in more detail. But if there's an item on anyone's return which is very, very far away from the bell-shaped curve, you're going to have a flag. I don't think there are going to be very many returns which have tens of thousands of dollars in clothing; there's nothing wrong with doing it, of course, but you'd just want to make sure that you document the heck out of the transactions.

Contributing appreciated stocks or mutual funds is such a common practice that it's not going to be the same red flag. You have to document the date of purchase and the amount of purchase, which is easily documented. Clothing, TVs, appliances, are all far more difficult to value. Even cars and art require a lot of paperwork if you want to survive an audit.