Is it better to donate items to charity (clothes, dining room table, etc...) or try to sell them on e-bay? ?

Question

considering e-bays fees, and the cost of shipping items to buyers.

I know it would depend on the amount the items sells for, but in general which is better?

Answer 1

Better how?  Financially to you?  It's almost always better financially to sell it outright, although if you sell a dining room table on ebay be sure to specify buyer pickup unless you are willing to set up shipping for it - even though the buyer pays shipping, would still be a pain.

If you donate it:  your deduction is limited to the used value of the item.  Lets say you paid $800 for the dining room table, but would only be able to sell it for $150.  Your deduction is $150, and then only if you itemize - if you don't, then you get no tax break for it.  Then if you are in a 15% tax bracket, your tax savings would be 15% of the $150 deduction, or $22.50.  Under the same situation, if the clothing has a used value (sale price in a thrift shop) of $100, you already itemize anyway, and you are in a 15% bracket, your tax savings would be $15.

Answer 2

The deduction is based on fair market value, not the value to you.  My parents regularly donated clothing (mostly what my younger brother had outgrown) that had a value of $0 to them (because it would not fit anyone in the family) and still claimed a deduction.

The amount of tax savings depends on your tax bracket but is usually 5-35% of the amount that you could obtain by selling.  In rare cases where the donation makes the difference of whether you quality for a tax credit worth more than the item being donated, donating is better.

In general, selling is better for you.  Donating is better overall, because of the benefit to the charity.

I recommend that you sell the item, contribute the money that you receive to an IRA, and deduct the IRA contribution.  This gives you the tax benefit and you have money in your IRA that you would not if you donated.

Answer 3

You're always better off yourself with dollars in your pocket than dollars spent on anything, even donations.  The most benefit you can get from donations is 35% of their fair market value and most get much less than that; the typical taxpayer's marginal tax rate is 15% or 25%.  (And if you don't itemize, you don't get any benefit from donations at all.)

Since buyers pay the shipping charges on items you sell (if you're doing it right anyway) the only cost to you is the listing fee on pay sites.  That's generally a lot less than the tax benefit.

Donate for the good that it will do, not for any tax benefit that you might receive.  If you just want the most dollars in your pocket, hold a garage or yard sale.

Answer 4

If you sell the items for what they are worth, it is always better to get the cash rather than a deduction, which will reduce your taxes by at most a percentage (max 33%) of the value of your contribution.