If you are planning to make a charitable donation of any kind (not just a car donation), there are a number of things you can do to ensure that you take the appropriate car donation tax deduction and that the right organizations benefit from your gesture. The IRS lists 10 tips that every taxpayer should know before taking deductions on donations. (See the original, detailed list here.)
- Make sure that the contribution is going to a qualified organization, or it will not be deductable.
- The contribution must be itemized using Form 1040, Schedule A.
- Remember that special rules apply to a car donation and how much of it will actually be deductable.
- If you receive something (merchandise, services, etc) in return for the contribution, this can change the deductable amount.
- Keep detailed records of all charitable donations, no matter how large or small.
- You can only deduct the contributions that you made during the year.
- You can include credit card or check payments in the year you made the contribution, even if you won’t pay the credit card bill until the next year.
- Any contribution of more than $250 must have written acknowledgement from the recipient organization to substantiate the donation.
- If you deduct items (cars) worth more than $500 you must fill out Form 8283 Noncash Charitable Contributions.
- You might need to get an appraisal if you claim the donation is worth more than $5,000.
Whether you are taking a car donation tax deduction or making some other kind of charitable contribution, these tips and guidelines will help you understand what needs to happen to maximize your deduction.