Is This a Good Time To Donate Closeouts To Charities?

Your monetary donations and donations of clothing and household goods that are in “good” condition or better are entitled to a tax deduction, according to Federal law. The Internal Revenue Service requires that all charitable donations be itemized and valued. If your company buys and sells closeouts and has excess inventory it is trying to get rid of before the end of the year, you can either sell in bulk to wholesale liquidators or you can make a tax deductible donation to get the merchandise out of your warehouse and free up space. Use a list of average prices as a guide for determining the value of your donation. Values are approximate and are based on items in good condition. Closeout websites and inventory liquidators are good outlets for too much inventory, but if you can't sell it you can give it away free.

It’s a good idea to check with your accountant or read up on the rules before you file you return. Here are some handy IRS tips for deducting charitable donations. When you bring items to a Goodwill donation location, you may fill out a paper donation form. The form is required if you are donating computers and other technology equipment so that they can comply with state reporting requirements. Keep in mind some closeouts are better off sold to excess merchandise buyers and inventory liquidators rather than trying to donate.

You can donate closeouts of toys, housewares, sporting goods and home goods. If you are in the wholesale liquidation business and have things that simply wouldn't sell, there are charitable organizations that would be happy to take your overstock merchandise and excess inventory for free. In addition to donations, most Goodwill stores also buy a percentage of new goods to help keep the stores looking fresh and new. For this, they often look for deals on closeouts, overstock inventory and slow moving products they can buy at a discount. You might be able to sell them your excess stock from previous seasons, excess inventory leftover from a merger, or even Amazon inventory if you want to get rid of it because long term storage fees are too high. If you are closing down your business and want to get rid of inventory, you can first try selling to closeout websites and wholesale liquidators. These companies specialize in buying overstock inventory due to the pandemic, slow moving products, canceled orders, or inventory leftover from previous seasons. Also, if you are shutting down operations or downsizing your warehouse you may have extra inventory to liquidate. If you itemize deductions on your federal tax return, you may be entitled to claim a charitable deduction for your Goodwill donations. According to the Internal Revenue Service (IRS), a taxpayer can deduct the fair market value of clothing, household goods, used furniture, shoes, books and so forth. Fair market value is the price a willing buyer would pay for them. Value usually depends on the condition of the item. By law, a charity cannot tell you what your donated items are worth. This is something you must do yourself. To assess “fair market value” for your donations:

• Consult a local tax advisor who should be familiar with market values in your region
• Review the following tax guides available from the IRS

If you want to pursue selling your overstock inventory before making a donation, a Google search may help you find the right buyer. Try using search terms like inventory liquidators, excess inventory, closeout websites, closeouts, closeout brokers, closing company liquidating inventory, need room in warehouse and going out of business by end of the year. If this doesn't work, you can always turn to donating inventory free.

Determining the Value of Donated Property — defines “fair market value” and helps donors and appraisers determine the value of property given to qualified organizations. Closeouts are often valued at fair market value because they are sold in discount stores and liquidation sales at reasonable or discounted prices. It also explains what kind of information you must have to support the charitable contribution deduction you claim on your return. (Publication 561) To help you determine your donations fair market value Goodwill is happy to provide a Donation Value Guide that offers average prices in their stores for items in good condition.

Charitable Contributions — explains which organizations are qualified to receive deductible charitable contributions, the types of contributions you can deduct, how much you can deduct, what records to keep, and how to report charitable contributions (Publication 526). This may sound more complicated than selling your closeouts to an inventory liquidator, but that may not necessarily be true. When selling in bulk to overstock inventory buyers you may be asked to provide detailed information about the particular discontinued inventory being liquidated. They may ask for carton dimensions, pallet dimensions, bar codes, inner packs, retail packaging, etc. If you are giving away inventory for free and bypassing closeout buyers and companies that specialize in purchasing overstock inventory, you may not have to do any of this.

A Closeout company is a specialized wholesale liquidator that purchases discontinued inventory and stock lots of housewares, pet products, home goods, sporting goods, toys and hardware. They buy closeouts of lawn and garden products as well, and any other excess inventory taking up too much space in your warehouse. Closeout buyers often buy products from 3PL warehouses when they dispose of excess inventory from clients who have shut down operations and abandoned the inventory.

Charitable contributions are one of the best tax-saving opportunities available. Not only does the charity benefit, but taxpayers enjoy tax savings by deducting part or all of their contributions on their tax returns. The tax treatment of a charitable contribution varies according to the type of contributed asset and the tax-exempt status of the recipient organization. Rules differ for individuals, businesses, and corporate donors. Also, the amount of the deduction is subject to standards and ceilings. For example, if your business has some overstock pots and pans to dispose of, or closeouts on pet products, these may be perfect to donate to a thrift store. But if your company is closing it's warehouse and shutting down operations it may not be easy to donate work stations, old computers, used desks and chairs and old office equipment. If you are shutting down your warehouse filled with too much inventory and you are closing down all operations and looking to liquidate, you may consider going the donation route for all of the liquidation inventory in the warehouse.

The list of eligible entities includes organizations operated exclusively for religious, charitable, scientific, literary, or educational purposes; the prevention of cruelty to animals or children; or the development of amateur sports. Donations to nonprofit veterans’ organizations, fraternal lodge groups, cemetery and burial companies, and certain legal corporations can also qualify, but only if the donations are designated for eligible purposes. Whatever the case may be, if you are getting rid of liquidation products that have everyday wide appeal, the charities should be happy to help you shut down operations or simply clear all the stock from your warehouse.

Merchandise USA is an inventory closeout buyer in business 38 years. We specialize in helping companies with end of line stock if the are looking to dissolve operations or simply downsize warehouses. Also, if you are moving warehouses and need to liquidate inventory we can help. We buy closeouts of pet products, closeout home goods, overstock inventory of housewares and toys, as well as discontinued home goods and stationery products. If you are moving warehouses or downsizing your 3PL warehouse we can help with overstocked inventory.