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Many people don't realize that they can donate any car or vehicle they have for a substantial tax credit. The benefit
Donating your car or vehicle to charity can be a great way to get a tax deduction
Previously to January 2005, the IRS was allowing people who donated to a qualified car donation program to take a tax deduction based on their vehicle's market value no matter how much or how little the vehicle sold for. Since then the IRS has taken the guesswork and Freedom out of determining the value of your donated car, truck, RV, boat or other vehicle.
Now if you want to claim fair market value for your car donation to reduce your federal income taxes, you must itemize deductions
Tips
If the charity sells your car sells for $500 or less, you can deduct $500 or your car’s fair market value, whichever is less. For example, if your car is valued at $650 but sells for $350, you can deduct $500.
Most charities will report the sales price of your car to you on Form 1098-C.
Warnings
You must have documentation of your donation. At a minimum, the documentation you receive from the charity must include your name, the vehicle identification number, the date of your donation and a statement describing the goods and services you received, if any.
Heads up!
Some Charities Offer Vacation Packages As Incentives To Donate your car or Vehicle. Does That Affect My Tax Deduction?
A:YES! If a charity provides a commodity, like a vacation package, for example, in exchange for a car or vehicle donation, then the tax receipt from that charity must state the fair market value of that commodity and the fair market value of that commodity must be subtracted from the value of the car donation.
For example: If your vehicle sells for $1,000.00 at auction and your vacation package that you receive has a fair market value of $400.00, you can only deduct $600.00. That's $1,000.00 for the donated car less $400.00 for the vacation package resulting in a maximum deduction of $600.00 ($1000.00 - $400.00 = $600.00)
We certainly do not want donors to be shocked by receiving a tax letter that states they have to subtract the fair market value of the vacation from the value of their vehicle.
Donating your car or vehicle to charity can be a great way to get a tax deduction
Previously to January 2005, the IRS was allowing people who donated to a qualified car donation program to take a tax deduction based on their vehicle's market value no matter how much or how little the vehicle sold for. Since then the IRS has taken the guesswork and Freedom out of determining the value of your donated car, truck, RV, boat or other vehicle.
Now if you want to claim fair market value for your car donation to reduce your federal income taxes, you must itemize deductions
Tips
If the charity sells your car sells for $500 or less, you can deduct $500 or your car’s fair market value, whichever is less. For example, if your car is valued at $650 but sells for $350, you can deduct $500.
Most charities will report the sales price of your car to you on Form 1098-C.
Warnings
You must have documentation of your donation. At a minimum, the documentation you receive from the charity must include your name, the vehicle identification number, the date of your donation and a statement describing the goods and services you received, if any.
Heads up!
Some Charities Offer Vacation Packages As Incentives To Donate your car or Vehicle. Does That Affect My Tax Deduction?
A:YES! If a charity provides a commodity, like a vacation package, for example, in exchange for a car or vehicle donation, then the tax receipt from that charity must state the fair market value of that commodity and the fair market value of that commodity must be subtracted from the value of the car donation.
For example: If your vehicle sells for $1,000.00 at auction and your vacation package that you receive has a fair market value of $400.00, you can only deduct $600.00. That's $1,000.00 for the donated car less $400.00 for the vacation package resulting in a maximum deduction of $600.00 ($1000.00 - $400.00 = $600.00)
We certainly do not want donors to be shocked by receiving a tax letter that states they have to subtract the fair market value of the vacation from the value of their vehicle.
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