Archive for the ‘Benefits’ Category

Tax Deductions Still Apply After An Extension

Tuesday, June 1st, 2010

Try as we might, some of us just can’t quite get everything together for the April 15 deadline. We’ve done what we could, but now we need to file for an extension on our 2009 tax returns. If you’re in this situation, don’t feel too bad. More than 8.5 million taxpayers received extensions this year. The good news, though, is that you can still take a car donation tax deduction.

Keep Track of Your Documents

Many taxpayers have made their charitable donation only to lose the all-important tax deduction receipt somewhere between the time the car is taken away and the time to file for a tax return (whether filing for an extension or not). This situation is, of course, only exacerbated when deadlines get stretched out and other things start to get in our way.

The tax deduction receipt is critical to take the appropriate deduction, and it has all the information you (and, of course, the IRS) will need. It has the name of the charity that received the donation as well as its 501(c)3 registration number, the date the donation was made, and a statement that you didn’t receive any financial benefit in return for the donation. Hold onto this document. You will need it to get the full value of the deduction.

Keep Track of Your Deduction

When you’ve done something generous like donating a car to charity, you really do deserve some kind of recognition for it. The government has provided this in the form of a tax deduction, and there is no reason to miss out on it just because you filed for an extension. Get all your records together and make sure that when you do file your taxes you are deducting everything you can.

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How A Tax Deduction Works When You Donate a Car

Tuesday, May 11th, 2010

One of the biggest incentives to entice you to donate a car is the tax deduction that you get from the government. A few years ago, the IRS buckled down on car donations and some things changed, but that doesn’t mean that you still can’t get your car’s value. Here’s how it all works:

  1. When you decide to donate a car to charity, it used to be that you could deduct the fair market value of your car—which is not the same thing as the full “suggested retail price.” However, because people were abusing this, the IRS stepped in.
  2. Now, when you do a car donation to charity, you do not have much (if any) control over the amount you get back from the government. If your car is valued over $500, then your deduction is based on the actual selling price from the charity. This means:
  3. You need to donate your car, and within 30 days, the charity will send you the statement that says the amount for which your car sold. It can be a little scary donating a car without knowing how much money you’ll get back, but that is how it works with every charity organization.
  4. When you file for your deduction, you will need to include this statement of sale with the tax return.
  5. After that, it is easy, since you only need to wait for the money from the government—which is sometimes easier said than done.

The process to donate a car is especially easy, even with the changes from the IRS. It puts a lot more control in the government’s hands, but the end result is the same.

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IRS Rules For Charity Car Donations

Monday, April 26th, 2010

One of the many benefits of donating a car to charity is the opportunity to take a significant tax deduction. However, in order to get the best tax break possible, it is very important that you follow all the rules and suggestions laid out by the IRS. This way you can receive your deduction without incurring too much unwanted interest from the Internal Revenue Service.

A few years ago the rules changed regarding the amount you can claim for a donation. Now, the amount you can deduct is based on the fair market value of the car, unless that value is over a certain amount. You can find more details about these deductions on the IRS page.

The IRS, however, has made a number of suggestions to make this process easier. They recommend:

Itemizing Your Deduction

Often, tax payers don’t itemize their deductions because it is so much easier to take the standard deduction. If, however, you are planning to claim a car donation, you must take the time to fully itemize your tax deductions.

Calculating/Deducting the Fair Market Value

Before you do your taxes, you are going to have to figure out the actual value of the vehicle. This can be done with many of the buying guides on the market, but be sure to take mileage, condition, and other factors into consideration. You are allowed to deduct the fair market value of the vehicle, up to a certain amount. Remember, if that value exceeds that number, then the deduction should be kept to the amount of the gross proceeds.

Document Everything

It’s no secret that the IRS is going to want proof of all your activities. That means you will need to have all the proper records and information ready for them. You will receive a receipt that shows your donation, and you will need to hang on to any other related documents as well.

Donating your car to charity isn’t a difficult process. Just make sure that you follow these rules and suggestions to maximize your deduction and get as much value out of your vehicle as possible.

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