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Tax Deductions For Car Donations |
By:
Michael Trusthold |
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Tax Deductions For Car Donations
Michael Trusthold
Donating a vehicle can be a great way to give to your favorite charity. The government will recognize your generosity with a special tax deduction, but certain requirements apply in realizing these tax breaks.
There are policies regarding vehicle donations that may not be as straightforward as with other charitable contributions. The amount of tax relief you can receive is dependant on the value of your donation, and how the charity intends to use the vehicle. You may not even be aware of your full tax deduction amount at the time that your donation is made.
As of 2005, there have been changes to the statutes for tax deduction for vehicles donated to charitable trusts. If the stated value of the donated vehicle is more than $500, and if such vehicle is put up for sale by the charitable trust, then the taxpayer is limited to the gross profits from the transaction.
Taxpayers wishing to benefit from such a charitable donation need to keep the following points in mind:
Itemize Your 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.
Claiming Fair Market Value
When filing your tax return, be sure to deduct the fair market value of the vehicle. This amount will take into consideration the condition of the donated vehicle. Claiming the full value of the car is not acceptable.
The Estimated Fair Market Value
When determining the value of your car, there are various factors to consider. You can use an up-to-date used car guide for fairly precise instructions to evaluate your vehicle's value. Some adjustments may be needed to reflect the accessories, mileage and other indicators of the general condition of the vehicle.
Verify the Eligibility of the Organization
The charitable trust must qualify with the tax department in order for you to receive a tax benefit. A good place to find a complete list of recognized charities on with Publication 78, available online and in public libraries.
Filing Your Charitable Contribution
Keep good records when claiming a tax deduction for your vehicle donation. Store all receipts and forms relating to the car donation, and a copy of its fair market value, in a secure place.
Taxpayers in the United States who have donated a vehicle to charity can contact the IRS at 1-800-829-1040 to find out if the contribution is tax deductible. If you are afraid that someone has taken your contribution for deceitful purposes, you can speak with an appropriate state charity official at the state Attorney General's office.
Donating a spare vehicle is a very generous way to benefit your favorite registered charity. The organization will thank you, and the taxman will, too.
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Article Source: http://www.statssheet.com/articles/article64719.html |
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