Can’t decide if you should have a garage sale to get rid of your excess stuff or just box it up and donate it?
Not sure which option, in the end, will earn you the most money?
There are a lot of people who enjoy taking a day to have a garage sale (or yard sale depending on your location) and then there are those who would rather just shove it in a box and get rid of it – not having to deal with the time and money to promote the sale, the bargaining of shoppers, the initial pricing, the planning, etc.
To ensure which option will be best, you first need to do some organizing and planning of your deductions to see if donating will be a beneficial option.
Assess your itemized deductions
You must assess whether you have enough itemized deductions to exceed the standard deduction for your filing status.
Itemized deductions may include:
- Medical and dental expenses (in excess of 7.5% of your Adjusted Gross Income)
- State and local income taxes
- Home mortgage interest, qualified mortgage insurance premiums, and real estate taxes
- Charitable contributions
- Unreimbursed employee expenses, tax preparation fees, and other miscellaneous deductions (in excess of 2% of your Adjusted Gross Income)
The 2012 standard deduction amounts are:
- Single and Married Filing Separate – $5,950
- Head of Household – $8,700
- Married Filing Joint and Qualifying Widow(er) – $11,900
Do your itemized deductions exceed the standard deduction?
If you determine your itemized deductions will not exceed the standard deduction, then donating the items will not benefit your tax situation.
On the other hand, if you determine your itemized deductions may exceed the standard deduction, then you will want to value the property or goods you are thinking about donating.
Place a value on your donations
The value of used clothing and other personal items is based on “Thrift Value” or “Fair Market Value” (FMV) – the price a buyer would pay at a consignment or thrift shop.
Generally, this amount is more than what you would expect to receive when selling the items at a garage sale.
However, if you know your itemized deductions will not exceed your standard deduction, then the benefit of donating the items has diminished.
Needed documentation for donating to a charitable organization
Lastly, keep in mind, that if you do donate items to a charitable organization, there is certain documentation you must keep with your tax records to substantiate the deduction (Note: This information does not need to be submitted with the return).
This may be a receipt or written statement from the organization or a reliable written record that shows the organization’s name, address, date of contribution, and a description of the property.
Do you prefer to have garage sales or is it just easier for you to donate your unwanted items?
Image source: brettdavis