Car Donations That Are Tax Deductable

Car Donations That Are Tax Deductable



With the​ start of​ the​ New Year and tax time right around the​ corner you​ are probably looking for items that you​ can deduct to​ reduce your taxable income. Since the​ laws on​ what can be claimed vary from state to​ state and country to​ country there is​ a​ lot of​ confusion about what a​ deduction can be. in​ the​ US the​ Internal Revenue Service (IRS) has many documents that can be use to​ determine what can and cannot be a​ deduction.

One aspect of​ tax deductions that is​ increasing in​ popularity has been car and vehicle donations. a​ simple process that both the​ donor and the​ charity can benefit from. a​ perspective donor gives a​ vehicle to​ a​ registered charity. That charity does one of​ several things with it.

• They can sell off the​ vehicles in​ running order and use the​ proceeds to​ fund their organizations.

• if​ the​ vehicle is​ not on​ running order it​ may be repaired or​ sold as​ scrap.

Either way the​ charity benefits from the​ donation and so do the​ worth while causes they support.

It is​ a​ simple process,​ however,​ as​ a​ donor you​ have to​ determine a​ couple things before you​ can legally write off any contributions made by donating your car.

First you​ have to​ be eligible to​ receive the​ tax deduction. This can be as​ simple as​ itemizing the​ deductions on​ Schedule a​ of​ Form 1040. However there are other limitations that you​ must be aware of​ before simply deducting the​ donation.

• Does the​ vehicle you​ are intending to​ donate qualify as​ a​ tax exempt vehicle? This is​ obviously important and there is​ a​ good chance that it​ will. Most vehicles that are legal for public roads are able to​ be used as​ a​ tax deductible donation. This also includes boats and planes plus some all terrain vehicles.

• the​ percentage you​ can claim. Since you​ are only able to​ claim up to​ 50% of​ your current gross yearly income you​ are limited if​ you​ are donating a​ vehicle such as​ a​ plane that can be worth thousands or​ tens of​ thousands of​ dollars.

• For contributions between $250 and $500 there is​ less information required to​ deduct the​ donation. the​ acknowledgement form from the​ charity will have to​ contain the​ following.

o Name of​ the​ charity
o Vehicle Description
o Plus one of​ the​ following

- a​ statement saying you​ never received any goods or​ services for your donation. Or…

- a​ statement provided from the​ charity with a​ description and fair market value of​ goods or​ services they may have provided to​ you. Or…

- if​ goods or​ services were provided in​ the​ form of​ non-tangible services (ex: :religious advice) this must be stated.

• For donation amounts that exceed $500 you​ will need to​ gather additional information before trying to​ deduct the​ donation amount. When you​ receive the​ written acknowledgement from the​ charity it​ must contain additional information.

o Your name and Tax Identification Number
o the​ vehicle identification number must be present.
o the​ date of​ the​ vehicle donation must be included
o One of​ the​ following must also be included with the​ date of​ the​ donation

- a​ statement saying you​ never received any goods or​ services for your donation. Or…

- a​ statement provided from the​ charity with a​ description and fair market value of​ goods or​ services they may have provided to​ you. Or…

- if​ goods or​ services were provided in​ the​ form of​ non-tangible this must be stated.

-The charity itself must have tax exempt status with the​ Federal Government. Most education and religious organizations are tax exempt. the​ IRS maintains a​ particle list of​ those organizations that have tax exempt status. Go to​ the​ IRS website and search for Publication 78,​ Cumulative List of​ Organizations. This will be your best place to​ start for determining which charities you​ can donate to​ and receive a​ tax write off.

The charity itself must have tax exempt status with the​ Federal Government. Most education and religious organizations are tax exempt. the​ IRS maintains a​ particle list of​ those organizations that have tax exempt status. Go to​ the​ IRS website and search for Publication 78,​ Cumulative List of​ Organizations. This will be your best place to​ start for determining which charities you​ can donate to​ and receive a​ tax write off.

By following the​ guidelines provided by the​ IRS and the​ charity you​ choose to​ donate to​ you​ can help out those organizations in​ need plus you​ are able to​ help yourself out with a​ tax deductible donation. Just remember to​ follow the​ rules and both parties involved will win.




You Might Also Like:




No comments:

Powered by Blogger.