To Gift or Sell?

The idea of donating to charity is wonderful, and ever more so in these times. In addition, charitable donations can be used as a tax deduction if you itemize, and are deductible whether you are in Alternative Minimum Tax (AMT) or regular tax. They don’t help your taxes if you use the standard deduction. (With real estate taxes and a mortgage, you likely itemize).

To be deductible, household items need to be in good used condition or better. They will be valued at fair market value. The economic benefit to you will be your marginal tax rate times the fair market value. For example, a woman’s blouse might have a fair market value of $2.50 – $12 (Salvation Army Website). If the FMV were $10, and you were in the 25% tax bracket, you would save $2.50 on your taxes. Sometimes (often?) the value of the deduction is similar or even more than the garage sale value, as items can get sold for so little in some garage sales.

In addition to the receipt from the VOA or other charity, you will want a reasonable inventory – make a list, and/or take a picture of the items and drop it in your tax file. With the inventory, you will need valuations – one handy source is the Salvation Army website www.salvationarmyusa.org. Another is Goodwill – perhaps www.goodwillwct.org/How_to_Place_a_Value_on_Your_Donations.2624.lasso

As you are pricing your items, might want to take a look at those valuation guides to determine if it is worth the hassle!

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s