This time of year many families decide to clean out attics, basements and closets of items that they no longer need or want.
Spring cleaning is often followed by summer garage, yard and sidewalk sales — hoping that one family’s trash is another’s treasure.
However, when all is said and done the amount of money you may pocket from such a sale is, for my money, really not worth the time, effort and “agita” involved.
Regardless of the price you put on an item, buyers will insist on negotiating the price down to pennies. You will never get the full value of the items you are selling — perhaps about 20%-25% of what they are worth. Chances of selling everything are slim. There is always stuff left over, often in worse condition than when you started out because of excessive handling by browsers.
And do you really want strangers trampling through your yard or garage, and maybe even your house?
There is a much better way to get rid of the unwanted but still useable items that will put money in your pocket. Donate the items to Goodwill, the Salvation Army, your church or library, or any other qualified charitable organization and claim a tax deduction.
It is important to note before going any further that you will receive absolutely no tax benefit from donating your used books, clothes, toys, and household items to a church or charity unless you are able to itemize on Schedule A.
The amount of money that ends up in your pocket depends on your tax bracket. If you are in the 25% tax bracket you will bank 25% of the value of the items donated. If you are also able to itemize and claim a deduction for charitable contributions on your state income tax return as well you should add together your federal and state tax brackets to determine your “profit.”
Take my word — you will probably end up with more money in your pocket by donating your stuff instead of trying to sell it. The only problem is that you will have to wait until you file your tax return to get the money.
You can only deduct used items that are in at least "good" condition (the tax code does not define what is considered “good”).
Donations of clothing and household items with a minimal monetary value, such as used socks or underwear, are also not deductible.
You can claim a tax deduction for the “fair market value” of the items you are donating. According to the IRS, fair market value is the price a “willing, knowledgeable buyer would pay a willing, knowledgeable seller when neither has to buy or sell.” IRS Publication 561 provides guidance in determining fair market value for all types of property.
You are responsible for determining the fair market value of the items you are donating. The charity is not required to, and in most cases will not, provide you with a value.
Here are some Web sites that can provide assistance for determining the fair market value of used items:
If the total of all of your “non-cash” contributions for the year is more than $500, you must file Form 8283 Noncash Charitable Contributions. If any one individual item has a value of more than $500 you must provide additional information.
If the total value of items donated to a charity in a single day is more than $250 you must have a written acknowledgement from the donee organization with the name and address of the charity, the date of the contribution and a description of the items donated.
Whenever you make a contribution of used items to a church or charity you should always make a detailed listing of the items donated with the condition and value of each set of items (i.e. six pairs of men’s pants, good condition = $60, five pairs of men’s shoes, good condition = $75). If possible, use the list as a receipt and have it signed by a representative of the church or charity. Keep the list with your tax records for the year of the donation. You may want to attach a copy of the list to Form 8283.
When donating used clothes and household items to charity you should go with the “old reliables” like Goodwill Industries, the Salvation Army or Vietnam Veterans of America — this way you are sure to be giving your items to a legitimate charity. In many cases, the charity will come to you to pick up your donations.
I also suggest you stay away from “drop-off” boxes. Not all of these belong to legitimate charities. While these boxes may be convenient, it's better to drop off your donation at a local Goodwill or Salvation Army store or donation center, where you can get a signed receipt.
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