Updated for tax year 2017
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. But then there are those who would rather just shove it in a box and get rid of it.
To know which option is best for you, do some organizing and planning of your deductions to see if donating is 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 percent of your adjusted gross income (AGI)
- 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 percent of your AGI)
The 2017 standard deduction amounts are:
- Single and Married Filing Separate – $6,350
- Head of Household – $9,350
- Married Filing Joint and Qualifying Widow(er) – $12,700
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 the “Fair Market Value” (FMV) of that item. FMV is the reasonable price a person interested in buying the item would pay someone reasonably interested in selling the item.
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, the benefit of donating the items has diminished.
Keep in mind, if you 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 a written statement from the organization. It needs to be a reliable written record that shows the organization’s name, address, date of contribution, and a description of the property.