Sell Your Trash
If you and I were neighbors and we were both walking down our driveways to take out the trash at the same time, we would likely strike-up conversation. What would you say if I asked you to sell me some of what you are throwing away? Would you? Furthermore, what if I said you could select what you put in the bag that you sell? That’s almost exactly what Uncle Sam says you can do.
It sure is easier to carry these items to the curb, but it certainly is less profitable.
Every year at tax time I ask, “Did you donate any clothing/furniture/household items to The Salvation Army, Goodwill or the American Veterans, a homeless shelter or a church benevolence program? Often the answer comes back “No”. “Nothing?” I ask.
They usually reply, “I really need to start doing that”. You see, (if you itemize) schedule A of your Federal return you are allowed to deduct fair market value for clothing, furniture, toys, tools, stocks, bonds, jewelry, art or a multitude of items donated to charity.
Prosperity often produces waste and if we are not careful, we could be throwing away money. When the garage sale is over and there are two tables worth of treasures left over, box them and donate them. You will get a percentage of your donation back as raw cash from your tax return. As a rule of thumb you will get about a third of the value of the item back on your tax refund. Uncle Sam actually encourages you to donate to charities. For many people this can be hundreds or thousands of dollars. Be sure and document the value of your donated items with blue book pricing, E-Bay comparables or some type of substantiation and keep that with your tax return detail. You will have to fill out one extra form if you exceed a $500 donation, so be sure and document when you purchased the item, what it cost, when you donated it and so on.
Our tax code really allows for some flexibility when it comes to donations. For example, did you know that you can generally donate an item and deduct the fair market value of the item, regardless of what it cost you? Imagine if you donate an item that was worth $2,000 yet only cost you $100. Many non-profit organizations will accept your old car, tools, appliances, furniture, even old cell phones. So stop carrying everything to the street and start selling it back to the government. You won’t even have to trouble yourself with the garage sale!
Keeping good records for tax time can really add up. Of course if you want to pay more taxes, the rest of us would like to thank you for your tax donation!
