Donate Garage Sale Leftovers To Charities
Front lawns and garages across the country are being turned into outdoor bazaars as households try to fatten their coffers, and clean out their attics, with weekend yard sales.
But the real financial gain can come after the sale when the unsold castoffs are donated to qualified charities.
“Don’t throw them out. You can save hundreds of dollars in taxes,” said William R. Lewis, a Lincoln, Neb., accountant.
The Internal Revenue Service lets taxpayers claim as itemized deductions the fair market value of donated property, which means what comparable items would sell for in places like thrift or consignment shops.
But it’s up to the donor to determine that amount. Donated property worth over $250 has to be substantiated by a signed receipt or documentation, and if the value exceeds $500, Form 8283 must be filled out.
The IRS provides some guidelines in Publication No. 561, “Determining the Value of Donated Property,” and Publication No. 526, “Charitable Donations.”
Jeanne Hamrick, a spokeswoman for Goodwill Industries Inc., suggests individuals browse through charitable shops to get an idea of fair market values. At Goodwill stores, for instance, the median price last year for used hand tools was around $2; a sweat suit, $7; sun dress, $4; and jean jacket, $10, she said.
Lewis also publishes a 56-page booklet, “Cash for Your Used Clothing,” which sells for $15.95 and lists values of more than 750 items of clothing and household goods commonly donated to charity. (Estimates are based on audits of three dozen consignment and thrift shops nationwide.) “A lot of people don’t realize they can .. claim the fair market value on their tax returns,” said Lewis.
“A lot of times they’ll just bundle up a bunch of clothes and write down $100 when, in fact, it’s worth a lot more.”
Among the items he lists, all considered in “good” condition: a second-hand blender, $15; black-and-white TV, $35; living room chair, $65; standard kid’s bicycle, $22.50; men’s suit, $70; and boy’s jeans, $8.
Lewis offers a money-back guarantee on his booklet if readers who itemize their tax returns don’t save at least $200 on their next tax bill. His firm, Client Valuation Service, will also pay any interest and penalties if the IRS disallows the deduction, he said.
To stand up to IRS scrutiny most accountants recommend maintaining a detailed list of donated items, noting current market value and condition of the property, and if possible, the original purchase price. Photographs or videos are also suggested.
Lewis estimates households with annual incomes of between $35,000 and $80,000 can save 28 cents in taxes for every $1 in itemized deductions.
Non-cash donations totaling $1,000 for the year, therefore, could add up to a tax savings of $280.
They also add up to millions of dollars for the charities.
Goodwill Industries, for example, had revenue totaling $500 million last year from donated items resold to the public in its thrift shops, Hamrick said. She said the charity received 779 million pounds of clothing and textiles alone in 1995, or about 47 pounds per individual donation.