Growing up, my family hosted a garage sale nearly every year. In fact, it became such a big-to-do, that they’d co-hosted it with other families into a 3-4 family garage sale extravaganza!
Only problem is? Man, those things were a load of work.
Although, it’s in vogue now to have a pop-up shop, ya know, a place where a company puts together a new mini-store or restaurant for a limited-time only. That’s exactly what a garage sale is. Except instead of being for some cute kids clothes or yoga pants, it’s of…your old stuff.
So to run a garage sale, you have to:
- Dig up all of your crap (that’s the product!)
- Organize it to make it look pretty (that’s called merchandising!)
- Make signs, preferably with neon-colored cardstock, then drive around town placing them strategically on every power pole (that’s called marketing!)
- Actually run the garage sale — talk to customers, sell your wares, combat “shrinkage”, and collect the money
- Tear it all down
- Take the leftovers to Goodwill
And for a family of five, while both parents working full time, it’s just. not. worth. it.
Or is it?
Here’s our current method of getting rid of stuff we don’t need: Donating it to the thrift store. Generally, the closest to our house has been Goodwill. And every time we do this, they give us a lovely receipt.
That receipt we then use for our taxes to get a tax deduction, since we itemize our deductions (and still will even with the new tax law). Based on IRS Publication 561, since these are used items you can only deduct the value of the goods that someone would pay at a thrift store for the items.
But how much do things in a thrift store cost?
Well, here again, we can rely on some resources to help us. In fact, many Goodwill Stores provide value guides and the Salvation Army does too. It does take some time to keep records on all of this, but for this discussion, let’s say I’m getting rid of some kids clothes.
In fact, let’s get rid of 20 kids outfits — that is, 20 shirts and 20 pants. Not an unreasonable amount, I think. Using the Salvation Army’s guide (it looks prettier) and halving the difference between the “low” and “high,” each shirt is worth $4 and each pair of pants $7.25. Then, using a bit of mathemagic, we get that the total value for this round of donations is $225.
You just donated $225 to a thrift store, just by cleaning out the closet. Not too bad!
Ok, but what’s it worth to me?
Well, let’s say you hosted a garage sale and were able to sell all 20 outfits and made the same amount of money, $225 — that’d be great!
But instead, let’s figure out how much that deduction saves me money.
Here’s a real table of our real effective tax rates (taking Line 63 of our Federal 1040 plus our state return and dividing by our AGI listed on Line 37 of our 1040, I understand that my AGI is lower than our gross, so our actual effective tax rate is lower than this)
| Tax Year | Effective Tax Rate |
| 2017 | 15.0% |
| 2016 | 24.0% |
| 2015 | 17.1% |
Admittedly, 2018 might look closer to 2016 since 2017 featured a big earnings hit with some job shuffling and time off. That said, let’s use the average effective tax rate for this calculation: 18.7%.
So if my effective tax rate is 18.7%, then when I file my taxes and add another $225 in donations to Goodwill, merely by dumping out my kids’ closet of clothes they can’t wear anyway, I’ll actually be making $42.08 (18.7% of $225). Truly, I’m getting $42.08 more refunded on my taxes.
That means: By donating to Goodwill, I get $42.08 more. By hosting a garage sale, I could make $225 (assuming I sell all of the goods for $4 and $7.25, without haggling).
Also, this means I get to cut out so many steps and save buckets of time:
- Dig up all of your crap (that’s the product!)
- Organize it to make it look pretty (that’s called merchandising!)
- Make signs, preferably with neon-colored cardstock, then drive around town placing them strategically on every power pole (that’s called marketing!)
- Actually run the garage sale — talk to customers, sell your wares, combat “shrinkage”, and collect the money
- Tear it all down
- Take it to Goodwill
Overall, I think the potential “loss” of $182.92 ($225-$42.08) is worth the convenience of just being able to drop off bags at the donation center of Goodwill.
But what about me?
Admittedly, your calculus may vary. You might still want to consider the garage sale if you take the standard deduction and don’t itemize. You won’t get any financial benefit from giving to charity (of course, there’s the altruistic feelings about being charitable et al, but that’s for another post). So for you, donating to charity means a big $0.
However, you may do even better than me! If you have a much higher effective tax rate, and you will be itemizing your deductions, you can come out ahead. Mine was only 18.7%, if yours is 30% or 40%, then that means you could “make” $67.5 or $90 for the same $225 donation.
What do you think?
Drop me a line the comments! Do you agree? Disagree?