Car Donation Tax Deduction

Car Donation Tax Deduction

Car Donation Tax Deduction
Next to​ wanting to​ contribute to​ charitable causes,​ perhaps your biggest motivation to​ donate your car is​ the​ substantial tax break it​ can give you​ .​
Don’t be misled by information about your return,​ because the​ tax breaks you​ can get from a​ car donation may not be as​ big as​ you​ think .​
If your car donation is​ worth more than $500,​ then you​ should read Revenue Provisions in​ Section 884 of​ Title VIII .​
This details the​ new restrictions on​ car donations value at​ more than the​ aforementioned amount .​

In a​ nutshell,​ the​ provision caps the​ allowable amount of​ tax deductions to​ the​ gross proceeds received by the​ recipient (the charitable organization you​ donate your car to) from the​ sale of​ your donated vehicle .​
When you​ donate a​ vehicle with a​ claimed value of​ $500 or​ more,​ your tax-deductible amount will depend on​ how the​ charity uses the​ vehicle .​
For example,​ if​ the​ charity sells the​ car,​ then you​ can only deduct the​ amount of​ gross proceeds that the​ charity received from the​ sale .​
On the​ other hand,​ if​ the​ charity plans to​ use the​ car for tax-approved charitable work as​ approved by the​ law,​ you​ can claim the​ car’s fair market value .​
The same law also requires the​ charity to​ provide you​ with a​ written acknowledgment of​ the​ contribution within 30 days from the​ day you​ make the​ donation .​
If your recipient gives you​ a​ false or​ fraudulent acknowledgment,​ they will face a​ penalty .​

In many instances the​ tax breaks you​ get from donating your car are enough to​ cover (or exceed) the​ amount you​ could have sold the​ car for .​
Remember that you​ usually do not have to​ pay for any paperwork or​ dealer fees when you​ donate your car .​
In the​ end it​ is​ still more sensible to​ donate you​ car rather than sell it .​
This way you​ don’t only make a​ profit – you​ also help worthy causes.

You Might Also Like:

No comments:

Powered by Blogger.