You’ve finished your spring cleaning, but now you’re left with a random assortment of clothing that you’ll never wear again. So, we ask: What’s more profitable—donating your goods to a non-profit for a tax deduction, or selling them to a consignment store?
Winner: Donations (Unless You’ve Got Luxury Items)
Selling items to a consignment store requires a lot of work, as you have to convince the merchant of your stuff’s value. So, we only recommend it if you know your items are worth a lot of money. Otherwise, donating to Goodwill is as easy as cleaning your closet, bagging your clothes, and then finding one of the following stores: The Salvation Army, Goodwill Industries, Vietnam Veterans of America, and the Military Order of the Purple Heart. Drop your items off (which takes less than three minutes), get a receipt, estimate the value of your own clothes, and then fill out one or two simple forms at tax time. That’s it. DONE.
Here’s exactly how to donate and collect your tax break:
You Determine the Value of Your Own Goods
Organizations like Salvation Army and Goodwill usually give you a blank receipt for tax purposes. It’s your responsibility to determine the value of your own goods…which is stress-free and easy.
The Paperwork Isn’t as Bad as It Sounds
Just fill out Schedule A of Form 1040. If your annual donation of goods is between $250 and $500, then the receipt you got from Goodwill (or Salvation Army, or whomever) is enough documentation. If your annual donation is between $500 and $5,000, you’ll also need to complete part A of IRS form 8283 for “Non-cash Charitable Contributions.”
If You’re Wondering What That Nightgown Is Worth, Read Our Chart
Goodwill and Salvation Army both publish guidelines to help you figure out how much your stuff is worth. Here is a summary, at a glance:
If You Go for Consignment, Make Sure You Get What You Deserve
Search online for stores with keywords like “consignment,” “resale,” and “secondhand stores.” Call a bunch of them for over-the-phone valuations, in which you’ll tell the store about your item’s season, designer, and condition. Then, choose a few shops for an in-store valuation. Make sure to ask how long your goods will be showcased (typically, they’re on display for 30-, 60-, or 90-day periods). As payment, you’ll receive a percentage of the sale price, generally ranging from 10% to 50%. In order to argue for the best deal, you’ll need to know the background of your item, its value, and the rates that neighboring consignment stores are offering.
Keep good records of what you consign, and follow up with the store for progress.
Whether you’re donating or consigning, we hope that your wallet grows fat and your closet grows slim!
