While some items are true garbage and need to be thrown away, many others still have a useful life – and can be put to good use by someone else.
What do you do? You can have a sidewalk, yard or garage sale and try to make some extra money. Not what I would do. Do you really want the great unwashed masses tramping through your yard or garage, and possibly your house as well? This activity usually wastes a full day, is loaded with potential for agita, and in the end you never get what your stuff is really worth. During the last hour of the sale you often end up almost giving away what is left just to get rid of it.
A better idea is to donate your unwanted, but still usable, items to a church or charity. With this method you may ultimately end up with about 1/4 to 1/3 of the value of the stuff in your pocket (depending on your federal and state tax brackets) – which is probably not much less than you would end up in a yard sale anyway – you avoid the agita, and you get to help out a needy cause.
If you itemize you can deduct the “fair market value” of used items donated to charity. According to the IRS, fair market value is the price a “willing, knowledgeable buyer would pay a willing, knowledgeable seller when neither has to buy or sell.”
You are responsible for determining what the items you are donating are worth. The charity is not required to, and in most cases will not, provide you with a value. There are several online guides to help you come up with a number. Click here for the Salvation Army valuation guide.
Whenever you make a contribution of used items you should always make and keep a detailed listing of the items you are donating with the condition and value of each set of items (i.e. 6 pairs of men’s pants, good condition, $60.00, 5 pairs of men’s shoes, good condition, $75.00). You may want to attach a copy of the listings to your tax return.
You cannot deduct the contribution of a used item unless it is in at least "good" condition. Donations of clothing and household items with a minimal monetary value, such as used socks or underwear, are also not deductible
When using a local charity’s bin at the mall to make your donation be sure that what you are dropping off on any one day is not worth more than $250.00. If the total value of items donated to a charity in a single day is more than $250.00 you must have a written acknowledgement from the charity with its name and address, the date of the contribution, and a description of the items donated. The acknowledgement must also indicate whether you received any goods or services from the charity in exchange for the donation.