Taxpayer asks:
Hi Taxgirl,
Like many women this year, I got married and now I would like to donate my dress to charity. What do I need to do for tax purposes? I paid 1000 for it new and only wore it once. It is in good condition. Do I need it appraised? I still have the receipts. If I send it to a charity, can I deduct the mailing cost? And can I deduct the cost of drycleaning it before I send it to the charity? Also, the charity resells the dresses at an auction/fundraiser and charges a $40 “processing” fee to help cover their expenses. Is this deductible?
Thanks for answering this question, I bet a lot of brides will appreciate your answer!
The new Mrs’s
Taxgirl says:
What a great idea!
Generally, you can deduct the fair market value of property donated to a qualified charitable organization. When it comes to clothing, the clothing must be in good used condition or better – it sounds like your dress is nearly perfect.
Usually, the fair market value of used clothing is considerably less than the original price. Usually, you’ll opt for the “thrift store” value of the clothing – what you’d pay for the same item in a thrift store or on consignment.
In this case, however, you will need a written acknowledgment from the charity and, quite possibly, an appraisal. I’m not sure what the value of the dress would be, but assuming that it’s over $500, you’ll want a written determination of the value of the dress (an appraisal will do).
You can’t deduct the cost of dry cleaning the dress but I will say that I’d do that prior to an appraisal. The better an item looks, the higher it’s likely going to be valued. I’ve found this to be true with respect to a lot of artwork. Once cleaned or repaired, the value went up substantially.
Unfortunately, the fees for the appraisal are not deductible as a charitable contribution. But you can claim them as a miscellaneous itemized deduction on Schedule A; they will be subject to the 2% rule.
I think there *might* be an argument on the postage front as an out-of-pocket expense but, personally, it’s not an argument that I’d love to make considering the relatively small benefit. Out-of-pocket expenses as charitable deductions are generally associated with volunteer time (when you can’t take a deduction for the time) or when you incur fees for the convenience of the charitable organization (i.e. you buy postage on your own dime for mailers). In this instance, technically the postage is for your convenience. I’d ask your tax pro for their opinion but if it were me, I’d be inclined to say no to this one.
With respect to the “processing fee”, I think it depends on the description and exact purpose of the fee. I’d check with the charity directly for that one.
I think it’s wonderful that you’re going to do something charitable with your dress rather than stuff it into a closet. Good luck!
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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Taxpayer asks:
My wife is a Girl Scouts Leader. Is all of her time and contributions to the troop tax deductible? If so, how?
Taxgirl says:
Okay, the bad news first: the value of your time spent volunteering for charitable organizations is never deductible. Ever.
But there is good news! Out of pocket expenses relating to volunteering for charitable organizations are deductible. To qualify, those expenses must be: (1) unreimbursed; (2) directly connected with the services; (3) expenses you had only because of the services you gave; and (4) not personal, living, or family expenses.
The most obvious example of out of pocket expenses relating to providing services for a charitable organization is the cost of transportation. You can either deduct the actual costs of gas, etc., related to your services or you can claim the standard mileage rate (currently 14 cents a mile for charitable deductions) to figure your contribution. No matter which method you use (mileage or actual), you can still deduct parking fees and tolls.
You can also claim travel expenses while you are away from home performing services for a charitable organization, assuming that the expenses are related to the services and not for personal use (such as a vacation). Travel expenses would include air, rail, and bus transportation (as well as expenses for your car); taxi fares or other costs of transportation between the airport or station and your hotel; the cost of lodging and the cost of meals.
If you buy uniforms or other related clothing, etc., as part of your charitable service – and are not reimbursed by the organization – you can deduct those costs. Be aware, however, that the general rule on those are that the uniforms must be worn while volunteering and are otherwise not suitable for everyday use (so the cool tee shirt that you wear occasionally to the mall doesn’t count).
Any other supplies or prizes that you buy to be used in the performance of your services would likewise be deductible.
So, no to the value of your personal services but yes to those related expenses. Keep good records when you travel or buy things for your troop and you should be okay.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl! – Now on Facebook at http://www.facebook.com/taxgirl
(Image courtesy of Wikimedia Commons and is in the public domain.)
Earlier today, I blogged the case of the Herbstreits who have sued the IRS for denying a charitable deduction for donating their home (but not the related property) to the local fire department for training purposes. Since then, I’ve had a few interesting conversations (including on twitter!) about the value of the deduction. The IRS generally defines the value of a charitable deduction as the lesser of your basis in the item (meaning what you paid for the item) or the fair market value. Yes, it’s actually a little more complicated than that, but for our purposes, it’ll do.
Those conversations of earlier today lead to my Fix the Tax Code Friday question:
How should the IRS value an item for the purposes of charitable deductions? Should the cost of labor be included (it currently isn’t) or should the IRS always the replacement value of the item? Does it matter what the item is?
Taxpayer asks:
Hi…
I’m about to file my taxes through efile using H&R Block’s Tax Cut software. I was wondering if the IRS will see my list of charitable organizations? When I filed paper copies in past years, that information was not disclosed.
Does efile provide the IRS with more information then paper filing?
Thanks!
Taxgirl says:
I can’t speak to the specifics of TaxCut but most software with efile capabilities only sends the required forms with no additional information. If you’ve made cash contributions, those will be reported on Schedule A, though not by name. If you’ve made non-cash contributions valued at more than $500, those will be reported on form 8283.
In most cases, the pages which you keep as your file copies are more detailed than what is transmitted to IRS. This makes sense because at audit, you would want to be able to break out charitable contributions by organization (and provide the applicable receipts).
If you want confirmation of what is being efiled, you can always try to contact H&R Block directly by phone (1-800-HRBLOCK or 1-800-472-5625) or online.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl! – Now on Facebook!
