Should I Donate or Have a Yard Sale?

Summertime is  a great time to clean out the garage, basement, closet or other places that you may have accumulated items that you no longer use. The question then becomes, what do I do with these items?  Does it make more financial sense to have a garage sale, sell online, or donate the items?  If the items are sold, is the income taxable? Do I need to charge sales tax?  If the items are donated, is the donation tax deductible? Let’s figure out the dollars and cents and find out which is best for you!

Selling Personal Goods

Is the income taxable?
Most of the time, when you sell personal use items at a garage sale or online, the sale will not need to be reported on your tax return. Per the Internal Revenue Service, “Income resulting from auctions akin to an occasional garage or yard sale is generally not required to be reported. However, there may be exceptions. If an online garage sale turns into a business with recurring sales and purchasing of items for resale, it may be considered an online auction business.”

Most items sold at a garage sale are personal use items and are sold at a loss (sales price is less than the original purchase price), and the loss cannot be deducted.  However, if you are selling a collectible, purchasing items with the intent on reselling them for a profit, or selling items used in a business, the gain will be taxable and need to be reported.

Do I need to charge sales tax?
Per the Ohio Department of Taxation, “whether it’s through an internet sale, an advertisement in the paper, or a yard sale, they are all considered to be the same type of transaction: a casual sale. Casual sales are not taxable transactions, as sales tax was paid on these items the first time they were purchased.”

For example, if you decide to sell your old MP3 player on an online auction/shopping website then you would not need to charge the buyer any sales tax.  In this example, you are selling a personal item that you originally purchased for your personal use; therefore, you are not required to charge sales tax. This would also be the case if you were selling the MP3 to a friend, neighbor, at a yard sale, etc. On the other hand, if you purchase an MP3 player at a very low price with plans of reselling it to try and make some extra money, you would need to charge sales tax. In this case, the item was not purchased for your personal use.

Donating Personal Goods

Are my donations tax deductible? 
If you decide to donate the items, keep a detailed list of the items you are donating, and get a receipt from the 501(C)(3) charitable organization you are donating to.  Most charities will not write the value of the items you donated on the receipt.  There are several websites that can provide assistance on valuing the items.  A valuation guide is available at The Salvation Army website.  Typically, the deduction value would equal the sale price if sold at a garage sale or the assigned thrift store price.

The ability to claim a deduction depends on whether you can itemize your deductions.  Due to the higher standard deduction, fewer people itemize deductions (Schedule A) on their tax return. This is the total of state and local taxes (limited to $10,000), mortgage interest, medical expenses in excess of 7.5% of income, and cash and noncash charitable donations.

The standard deduction for 2023 is $27,700 for married filing jointly, $13,850 for single, and $20,800 for head of household.  If your total itemized deductions are higher than the standard deduction, then you can itemize.  If you can itemize your deductions, then the items you donate will be tax deductible on your federal return.

Whether you choose to donate or sell your items, you know the tax rules, the items you are getting rid of will be of use to someone else, and your house will be less cluttered.

The information contained in this article is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional for your specific situation.

Filed under: Dollars & Sense, Life, News
Profile photo of Penny Wasem, CPA, CFP, PFS, owner of Lifetime Financial Planning Solutions in Lancaster, Ohio.

By Penny Wasem, CPA, CFP, PFS

Penny L. Wasem is the owner of Lifetime Financial Planning Solutions, LLC. A summa cum laude graduate of Ohio University, Penny earned a Bachelor of Business Administration with focus in accounting and mathematics. She serves on the board of The Fairfield Medical Center Foundation, is a member of the Investment Committee of The Fairfield County Foundation and has been active on many non-profit boards in the community. Penny lives in Lancaster with her husband Eric Hubbard and is parent to Clark and Olivia Hubbard.