If you donate a car to charity and itemize deductions on
your income tax return, it may be feasible to claim a deduction for your car
donation.
In 2005, the IRS changed the laws related to tax
deductibility of car donations because of exaggerated deductions based on
inflated order values (book values tend to become less reliable as a vehicle
ages). Under the new rules, the deductible amount of your vehicle(means of
transport) donation is directly related to the selling cost of your vehicle(means
of transport).
Donate a car and if it sells for less than $500 you can take
a tax deduction equal to the 'fair market value' of your donation up to $500.
Fair Market price is loosely explained as the "Blue Book" or
"Guide Book" value of your vehicle(means of transport). See our car gift
to charity help links below for Kelley Blue Book, NADA Guides or Edmunds.
The charity you donate a car to is required by IRS to send
to the donor a of that period written acknowledgement (receipt) within 30 days
of the vehicle sale. This receipt must include the following:
- The gross selling price of the vehicle (if sold for greater than $500)
- Year, Make, Model and VIN Information
- A speech that the vehicle was sold at arm's length between two unconnected parties
- And a speech that no goods or services were received in return for your contribution.
Keep in mentality that companies that guarantee goods or
services in return for your car donation are legally cutting into the amount
that you can claim for a tax deduction for your charitable contribution.
Tips To Maximize Your Car Donation Tax Deduction
Car Donation Wizard wants donors to know that donating a car
to charity not only helps the organization fund worthwhile research and
activities, but you also may be eligible to claim a tax deduction for your
charitable contribution. Here are some car donation tax tips:
1 Make sure the charity is eligible to receive
tax deductible contributions. The most common types of qualified organizations
are section 501(c)(3) organizations, such as charitable, educational, or
religious organizations. Visit IRS.gov to search for registered charities. Car
Donation Wizard only works with esteemed, 501(c)(3) non-profit organizations.
2 Be
sure that you get a receipt from the charity for your car donation. You must
obtain a written acknowledgment from the charity if the total deduction you are
claiming for a donated car is $250 or more. Car Donation Wizard mails a tax
receipt for your records following the sale of your vehicle.
3 The IRS will only allow a deduction for the
fair market value of the car. This can be found on the tax receipt mailed to
you for your donation.
4 If the car is worth more than $500, the
donor must complete Section A of IRS Form 8283 and attach it to their tax
return.
5 If the car is worth $5,000 or more, an
independent appraisal is necessary. The donor must also fill out Section B of
IRS Form 8283. Take pictures of the car and save receipts for new tires or
other upgrades to verify its value.
6 Always consult your tax adviser or the IRS
for more information about how you can claim charitable deductions. The IRS can
answer your tax questions and can provide tax forms, publications, and other
reading materials for further assistance. IRS materials are accessible through
the Internet at www.irs.gov, through telephone ordering at (800) 829-3676, and
at IRS walk-in offices in many areas across the country.
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