It is that time of year, again! Garage Sales are saturating Craigslist, neighborhoods, and our thoughts as we all try to determine if all of that pricing, organizing, and purging of our STUFF is worth it. Here are some important tips to consider as you are gearing up or scaling down the thought of opening up your garage to patrons.
1. Understand your Itemized Deductions. The IRS provides a great description of charitable donations as well as other itemized deductions you can look into. We will be posting a more detailed description between standard and itemized deductions on a future blog post next week!
2. Standard Deduction. What is the standard deduction for your filing status? Do you exceed the standard?
For 2016 the Standards are:
|Married Filing Jointly
|Married Filing Separately
|Head of Household
3. Your Status. Will your donations exceed the standard? If they don't then donating the items will not benefit your tax situation. Maybe opt for a garage sale at that point, to get some extra cash. If your donations do exceed the standard - you will want to value the goods you are looking to donate.
4. Value your items. When valuing your property you will want to use Fair Market Value FMV or a value you would expect someone to pay for your item at a Thrift Store. Generally, this is more than what you would expect to receive at a garage sale.
5. Documentation. You will need a receipt or written note to substantiated the deduction of the items you donate. This can be in the form of a statement from the organization or a reliable written record that shows the organizations name, address, date of the donation, and a description of the items. (Note: This does not need to be included with your tax return, but instead saved for reference in the future.)
6. Sweat Equity. Along with the tax advantages, and standard deduction comparisons, you will also want to give thought to your personal time to organize + prepare for the garage sale as well as the time spent "working" the sale itself. This is knows as "sweat equity." How much is your own time worth?
Some individuals enjoy time outside mingling with patrons and selling their things. Others would rather save the time and donate to take the deduction instead. Which would you prefer? What are your experiences with garage sales, time, and tax deductions?