My OperaAnimal rescue Tax Breaks for Car Donations
Sunday, June 13, 2010 5:15:23 AM
Donating a used vehicle can be a great way to support your favorite charity. The charity will certainly thank you, and the government will, as well. Your generosity can be recognized with a special tax deduction, but certain requirements can apply when realizing this type of tax break.
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.
Changes were made in 2005 to the statutes for tax deductions applied to vehicles donated to charitable trusts. When the declared value of the donated vehicle is above $500, and the vehicle is sold by the charitable trust, the taxpayer is limited to claiming only the gross profits of the transaction.
If you've made this type of donation and would like to take advantage of the tax break, keep these points in mind:
Itemized Tax Deductions
You must itemize your deductions in order to take full advantage of tax relief available to you. If you are claiming standard education, you will not benefit from this clause.
Claim the Fair Market Value
Deduct the fair market value of the vehicle when filing your tax return. This value is partly determined by the condition of the donated vehicle. You may not claim the full value of the vehicle.
The Estimated 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.
Check Your Charitable
Not every charitable organization is recognized by tax law, and you can only receive the benefit if the charitable trust qualifies with the tax department. Obtain a copy of Publication 78 at your local library or online, and see if your charity is listed.
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 in the USA and want to know if your contribution is tax deductible, contact the IRS at 1-800-829-1040. 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.
Columnist Michael Trusthold enjoys writing articles for numerous car sites, on used car sale and buy a car issues.animal rescue: L.A.
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