Archive for the ‘Benefits’ Category

Get Your Car Donation Tax Deduction

Friday, October 29th, 2010

Getting in Your Deduction

The year is winding down, and as November gets started and the holiday season begins to claim our attention, the idea of paying our taxes gets pushed to the bottom of the priority list. However, if you are sitting on a vehicle that has seen better days or you intend to donate a car for the tax deduction, it has to be done before December 31 at 11:59pm.

If you are going to donate a car and take a deduction on your 2010 taxes, you should start the process as soon as possible. Right now, there are a lot of people who are thinking about donating their own cars at the last minute, and soon it will be difficult to set an appointment for pickup that fits your schedule, and you are going to feel rushed and pressured to get all the paperwork in order. December is coming faster than you think, and you don’t want to let your car donation tax deduction get lost in the holiday rush.

Tax Deduction

Get Organized

We’ve given a lot of car donation tips and information on this blog, and by adhering to these practices and starting the process as early as possible you can make the most of your car donation tax deduction. Wondering where to get started? Take a moment and review some of these important posts:

Just remember, when you are planning on taking a car donation tax deduction, you should get as much information as you can before you start the process. However, you should also remember that we’re ready to provide all the support and help we can to make this experience as simple and painless as possible.

To Haggle or to Donate: This is the Question

Wednesday, October 20th, 2010

When it’s time to get rid of your old car, there are a few options available to you. For example, you could make a car donation, or you could sell it yourself and try to make some money from it. Unfortunately, this means you are opening your door to the hagglers – those people who only see this as an opportunity to exercise their skills and get the best deal possible. And, of course, the best deal for them means less profit for you.

The Haggler Mentality

So you’ve decided to sell your car yourself, and your first customer shows up at your door to inspect the vehicle. This is fine, you’re thinking, because you haven’t noticed the glint in his or her eye. You don’t realize that the haggler is more interested in getting a good deal than a good car.

The Haggler hasn’t come to your house to see if they like your car, or if it is as reliable as you say. They are here to talk down your price. They have a strategy, and they look forward to the experience of telling their friends how much of a discount you gave them.

They will have done their research, and they will know exactly what your car should be worth. They will plan for what they consider a great deal, good deal, and mediocre deal, and if you can’t come to an agreement that is above what they consider mediocre, they will probably walk away. You might even get treated to a little bit of a show, as they make it clear that they are more than willing to walk away from their offer if you don’t meet their price.

Unless you have your own set of haggling skills, this can be a tiresome practice that won’t do anything but use up your time and drain your profits.

The Charitable Mentality

There are a lot of reasons someone might choose to donate a car to charity instead. The most obvious reason, though, is the opportunity to do something good for an organization that relies on the generosity of others.

Donating to a charity is also a very convenient way to get rid of that old car without getting caught up in the long, drawn-out process of selling it on your own. It won’t matter what condition it’s in, you can still make a donation to help a worthy organization, and you can still receive some financial benefits from the allowable tax deduction.

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.

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.

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.