Donating clothes

[S T]

Neither do I

No I don't think AZ's client can substantiate the $3,000+ either.

I was just stating that the Goodwill and Salvation Army lists are probably not factoring where a donor might live, so therefore the values could be understated, although I refer to those lists quite frequently. I do like the Its Deductible as it gives a broader range. Quite frequently the t/p does donate to one of their local Thrift Stores, so the items would not necessarily be going to another Town.

I have also suggested to many of my clients that if they want to deduct what they believe the higher amount would be, to take pictures, and have some type of receipts of purchase, etc.

with that in mind, I have narrowed the amount of clients that want to deduct such large amounts. Makes my day so I don't have to fill out that 8283 form.

Sandy

[erchess]

Advice I give my clients

I tell clients to get a stenographer's notebook and make notes on each item given away - full description such as "brown flannel man's shirt size 19" and its condition including full details of any signs of wear or damage or stains rips holes tears mends etc. I explain that for clothing stains are not acceptable and tears rips and holes have to be expertly mended. I tell them to rate the item as new, good, fair or poor and that only new or good items may be deducted. I tell them that at the very least they must lay out all the items donated to one charity on one occasion and take a group picture of the lot and that a better policy is to take a picture of each item. I tell them to put down the value they think it would sell for in the thrift store where it ended up and then if that seems excessive to me I use the Salvation Army Site and TTB to cut it down. I also tell them to keep their receipts stapled to pages in their book.

I find that people who are willing to go to the trouble of keeping my book go along with my advice on cutting their estimated values. I simply won't deduct small value non cash contributions without this book. It does seem to me that it can be possible and cost effective to go back and recreate records if the taxpayer has donated one or more high value items but I've never actually had a client donate a single item worth more than a few thousand dollars.

[newbie]

A picture is worth a thousand words and so easy to do with digital cameras, the pictures with receipts and a list of items is a good idea to get you thru an audit.

[Gretel]

Got a client who donated 54 separate items of pants, shirts, pair of shoes, etc.. no suits and the TP came up with a value of $3,075 (thift value). All they have is those little door knob receipts from Vietnam Vets with no dollar amts on them. No letters of any type. They donated all the items to one charity on several occassions. To potentially not raise a red flag with the IRS, would it be better to spread out donations at the dates they were donated (some of the door knob receipts dont have dates) or can I just lump sum as one donation?

What is missed alot is that all non-cash donations throughout the year to the same charity are treated as one donation for the purpose of substantiation requirements no matter how you put it on the tax return.

[MAW TAX]

If they buy expensive collectible stuff....

I would find out if they usually buy expensive designer clothing. It could be that the clothing is worth more if it is collectible. I wouldn't toss it out until I've researched and asked a lot of questions. I'd also be very strict about documentation to back up the deduction. Showing their spending habits and ability to pay. Also if they usually only wear their clothing a couple of times and they are in excellent condition $57 for a suit that was originally $1500 would be a more than reasonable thrift shop value. Around my area in Seattle.....it would probably sell for $150 at the thrift shops and be snatched up quickly. It is amazing who is shopping there these days.

Have fun!
Hope this helps.
MAW

[joanmcq]

We've been getting slammed on the Its Deductible values in audits recently. Seem people love the 'high' value when they buy their clothes at Wal-Mart. There are different thrift stores for high end stuff; for example my local Salvation Army (near the homeless shelter no less) has a second shop next door called 'Sally's Alley' where they put the donated antiques, better furniture, housewares, etc. there are other shops that specialize in designer clothes and one or two that specialize in work clothes, suits etc. for battered women getting back into the workplace. If you are going to use a high value, you'd better document that you buy your clothes at Saks or Nieman Marcus and take pictures. And show you've given it to a place that has an area for better clothes and charges accordingly.

[Zee]

We've been getting slammed on the Its Deductible values in audits recently. Seem people love the 'high' value when they buy their clothes at Wal-Mart. There are different thrift stores for high end stuff; for example my local Salvation Army (near the homeless shelter no less) has a second shop next door called 'Sally's Alley' where they put the donated antiques, better furniture, housewares, etc. there are other shops that specialize in designer clothes and one or two that specialize in work clothes, suits etc. for battered women getting back into the workplace. If you are going to use a high value, you'd better document that you buy your clothes at Saks or Nieman Marcus and take pictures. And show you've given it to a place that has an area for better clothes and charges accordingly.

Hi Joanmcq-

Thanks for the information.

Please elaborate on what you mean by "slammed" by It's Deductible Audits? Are audits at the IRS office, or correspondence audits?How many audits have you participated in (or are you aware of)? Are the auditing only the values, or documentation (asking for photos, etc.) And, what have been the results (how much was disallowed)?

This is the type of information that would be extremely helpful to othrs here in deciding whether to suggest clients use this SW, or not and whether the values are unacceptable.

I'm also wondering if anyone else has seen a rise in such audits.

[joanmcq]

Just what i've heard from the people in the audit dept. As in people choose the high value and IRS disallows. So if you choose a high value, but ready to document.

Charitable has been a focus for a few years. now.

[JohnH]

Bumping this discussion back up with something I saw on a return today that had a bunch of non-cash contributions generated on an "It's Deductible" form. I never noticed until now, but the program generated a $32 deduction for charitable mileage for driving the car to the donation center.

Do others on this forum generally have clients who calculate the mileage to Goodwill and back? I can't say that I'd ever given it much thought.

[FEDUKE404]

Mileage not a major issue

Do others on this forum generally have clients who calculate the mileage to Goodwill and back? I can't say that I'd ever given it much thought.

I usually put that in the nickel and dime range, although I have mentioned the miles to be included in any other charitable mileage, such as Meals on Wheels.

Your client had around 230 miles total for the non-cash Goodwill stuff??

FE

[JohnH]

Yep, that's what they said. And they added that all trips were directly to Goodwill & back - none of that "side trips to the grocery store" stuff. (I think somebody's been coaching them well). They had over a dozen receipts, so it's possible, but as you pointed out the mileage is nickel and dime, especially when compared to the deduction they want to claim. I just never thought about squeezing out the mileage to Goodwill in trying to get "every possible deduction", as they say.

I probably shouldn't say this, but I admit that I sometimes have a negative personal reaction when people want to claim several thousand in non-cash contributions each year, especailly when accompanied by meager cash giving. It really isn't rational based on my understanding of human nature. But then I come back to my senses and realize that it isn't my place to judge - it could happen, especially if the income will likely support a "throw away" lifestyle. . If they have all the documentation, and if they are willing to sign my supplemental worksheet, then I'm willing to accept them at their word.

[travis bickle]

I am not sure I would deduct this as "charitable mileage"

I have always understood this to be mileage incurred when doing something for the benefit of the organization involved. Dropping off a box of blue jeans seems -- to me -- to stretch the concept of "benefit of the organization involved."

Of course, I realize that we are talking nickels and dimes here.

And here I thought I was being persnickety when I ask my clients if they have any specialty license plates on their vehicles.

[FEDUKE404]

Sometimes you do wonder

... but I admit that I sometimes have a negative personal reaction when people want to claim several thousand in non-cash contributions each year, especially when accompanied by meager cash giving. It really isn't rational based on my understanding of human nature. But then I come back to my senses and realize that it isn't my place to judge - it could happen, especially if the income will likely support a "throw away" lifestyle. . If they have all the documentation, and if they are willing to sign my supplemental worksheet, then I'm willing to accept them at their word.

Yup, many are invalid and some are well documented. I've noted it strange someone will donate $3k-$5k worth of "used clothing" but then have maybe $200 of cash contributions.

From my personal experience, I think there is a lot of "stuff" going on, especially as to inflated values re FMV, and more especially when "It's Deductible" comes into play. One client always says "But I buy EXPENSIVE clothes!"

Otherwise I agree with you: So long as we have done our job to explain the rules, and document as necessary, I wish them well when/if the IRS has a few "questions."

FE