Garage Sale vs. Tax Deduction
Should you sell or donate unused items?
As you de-clutter your home, you may find yourself wondering what to do with all the usable “stuff” you’re getting rid of. Specifically, should you hold a garage sale or donate the items to charity.
Garage sales can be a lot of work. You move everything to your garage, price it, pay for newspaper ads, put up signs and then – assuming the weather is good – invest a weekend waiting for people to shop. Once over, you’re faced with what to do with items that don’t sell. The reward is that you could end up with several hundred dollars in your pocket.
The other option is to donate the items to a non-profit organization. While donating items may not put money in your pocket today, it could give you a much-needed deduction come tax time – especially if you itemize your deductions.
When you donate an item you must base its worth on “thrift” or “fair market” value. In other words, the price someone would pay at a resale or thrift shop. If you’re unsure what that value would be, there are several websites that offer suggestions on determining an item’s worth.
You’ll also need to get an organizational receipt or statement showing its name, address, date of donation and what you donated. Keep this information with your tax records to verify the donation.
If you’re new to donating non-cash items, the Internal Revenue Service (IRS) offers eight easy-to-follow guidelines for non-cash charitable contributions.
If you’re not sure if an organization you donate to qualifies, the IRS also maintains a list of exempt establishments.
Note: This article is not intended to offer tax advice. Contact your accountant or tax professional to determine if non-cash charitable donations are suitable for you.