Donating A Car For Tax Deduction

Unlike the procedure for charitable donations, the policy for car donations for tax deduction is not as easy. The tax deduction will depend on the way the charity uses the car as well as the donor's claimed value of it. Therefore, it will be difficult for you to know the amount of your deduction when you donate the car. Also, there has been an alteration since 2005 for the tax deduction on cars donated to charitable organizations. If the stated worth of the donated car exceeds $500, and if such vehicle gets put up for sale by the charity, then the taxpayer will only receive the gross profits from the transaction.

Taxpayers who wish to benefit from such donations will need to keep these facts in mind:

1. Is the organization eligible? : The charitable trust must be fully qualified or the contribution won’t get the tax deduction. A good place to find out about an organization’s qualifications is from Publication 78 which is available online and in public libraries.

2. Make sure you itemize the deduction: If you want to receive a tax deduction, you will need to itemize your deductions. People claiming standard education cannot benefit from this clause.

3. Give a fair estimate: You must take various factors into account when you try to determine your vehicle’s value. Many buying guides for used-cars will give you precise information so that you can adjust the car’s value for accessories, mileage and other clues to its condition.

4. Make the appropriate deductions on the car’s fair market value: You can only deduct the fair market value of your car, which should properly consider the condition of the donated vehicle. It is a misconception to believe you can claim the car’s full value.

5. Keep track of your Charitable Contribution Deduction: When you donate your vehicle and claim tax deduction, it is essential that you keep records. Make sure you keep all the receipts and forms which are related to the car donation and its fair market value.

If you are a taxpayer and have any doubts on whether a contribution is deductible or not you should try calling the IRS at 1-800-829-1040, or for TTY/TDD help, you can try calling 1-800-829-4059. If you believe some contributions are being sought for immoral purposes, immediately contact the appropriate state charity official, who can often be found in the general office of the state attorney.

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