Donating a car makes you feel happy and satisfied from the inside. Whenever you think of donating such a big investment of yours then it makes you stop as you might think that you will lose money that comes from selling a car. But your money will not go anywhere. The government is providing tax deduction on donate car to charity. Check here as to how donating a car will give you happiness and make you smile.
Donate Car to Charity
It is not important that you can only donate a car which is running. Even you can donate car which is useless and not in a condition to run. If you have a car which is no longer running, its engine is useless and not working at all or its transmission has gone then also you can donate your car and get a tax deduction. All you have to contact them and the staff member will come to pick the car.
Car Donation Tax Deduction
You might have heard about donating a car can give you an amazing tax deduction. For applying tax deduction form, you need to have all the documentation for your car donation. Documentation that you get from the charity must include the name, identification number of your car, date of donation, and statement related to the car and its services.
How to apply for tax deduction?
After the completion of all donation car formalities, you will get the written documentation about the car donation as a gift. This will transfer the title into the charity. Then you can calculate the deduction on your tax return.
- Sold Vehicle< $500 = If the amount of the sold car is less than this fair market value then also you can claim the fair market value up to $500.
- Sold Vehicle> $500 = Then you can claim the same amount at which it is sold.
If your tax deduction lies between $501 to $5000 then you need to complete section A where if a deduction is greater than $5,000 then go for completing section B. After doing this you will get written notification as your documentation.
IRS Car Donation Form
IRS suggests you take help of used car price guide to calculate the tax deduction on your car based on fair market value. You can also go to the private party to find the prices of your vehicle depending on the market, model, and the whole condition. You can also do the valuation of your car via the internet.
You need to report the deduction amount on Schedule A as you can claim the deduction only if you have itemized. You can also do this by using turbo tax to prepare the taxation and to determine the filing status.
Donating a vehicle: Benefits
- Giving and donating something will give you inner satisfaction and make you feel proud.
- Donating a vehicle which is no longer needed, make you free from extra costs like maintenance cost, storage cost, and many other.
- Skip headaches and obstacles that occur while trying for advertisements and brokerage.
- No deal and negotiate talks.
- Tax Benefits
- Qualifying Charity