Tax Deductions For Car Donations
Donating a vehicle can be a great way to give to your favorite charity. The government will recognize your generosity with a special tax deduction, but certain requirements apply in realizing these tax breaks. Policies regarding vehicle donations are not as straightforward as with other types of charitable contributions. The tax relief you can receive depends not only on the claimed value of your donation, but also on the way the charity uses the vehicle. For this reason, you may not know what your full tax deduction will be at the time that you make your donation. As of 2005, there have been changes to the statutes for tax deduction for vehicles donated to charitable trusts.
If the stated value of the donated vehicle is more than $500, and if such vehicle is put up for sale by the charitable trust, then the taxpayer is limited to the gross profits from the transaction. Taxpayers wishing to benefit from such a charitable donation need to keep the following points in mind: Itemize Your Deductions To take full advantage of the deductions available for your car donation, you need to itemize your deductions. Those who claim standard education are not able to benefit from this clause. Estimate the Fair Market Value Various factors must be considered in determining the value of your car. Refer to a used car guide for precise instructions to find your vehicle's value.
Adjustments should be made depending on accessories, mileage and other indicators of its general condition. Deduct the Fair Market Value When making your claim, deduct the fair market value of the vehicle. This amount takes into consideration the condition of the donated vehicle. You may not claim the full value of the car. Verify the Eligibility of the Organization The charitable trust must qualify with the tax department in order for you to receive a tax benefit. A good place to find a complete list of recognized charities on with Publication 78, available online and in public libraries. File the Charitable Contribution Deduction When claiming a tax deduction for your vehicle donation, it is essential to keep good records. Be sure to keep and record all receipts and forms related to the car donation, and its fair market value. If you've donated a vehicle and want to know if your contribution is tax deductible, contact the IRS at 1-800-829-1040, or for TTY/TDD help, call 1-800-829-4059. If you are concerned that contributions have been sought for deceitful purposes, contact the appropriate state charity official, located in the state Attorney General's office.
If you have a spare vehicle, consider donating it to your favorite registered charity. The organization, and the taxman, will thank you.