Posts Tagged ‘irs’

IRS Tips For Making Charitable Donations

Wednesday, September 8th, 2010

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.)

  1. Make sure that the contribution is going to a qualified organization, or it will not be deductable.
  2. The contribution must be itemized using Form 1040, Schedule A.
  3. Remember that special rules apply to a car donation and how much of it will actually be deductable.
  4. If you receive something (merchandise, services, etc) in return for the contribution, this can change the deductable amount.
  5. Keep detailed records of all charitable donations, no matter how large or small.
  6. You can only deduct the contributions that you made during the year.
  7. 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.
  8. Any contribution of more than $250 must have written acknowledgement from the recipient organization to substantiate the donation.
  9. If you deduct items (cars) worth more than $500 you must fill out Form 8283 Noncash Charitable Contributions.
  10. 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.

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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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