subject: Donating A Car Can Give Tax Advantages [print this page] Many people have cars that they want to get rid of. What they don't realize is that donating the vehicle to a charity is often much easier than trying to just get rid of it. This is often not something that sounds appealing, but there is tax benefits involved. It is important when donating a car for a tax deduction that the donation is done in the proper way. This will maximize any deduction that is given.
There are tax rules that have changed in regard to vehicle donations. There was a time where a vehicle could be written off based on its fair market value. This was being taken advantage of by many people. The IRS realized that they needed to make a change. People were deducting way more than the true worth of their vehicles, and the government was losing money. If you feel your car is worth more than $500, the actual amount of money you can claim is what the car sold for through the charity of choice.
You may end up with a small tax donation. There are times when a charity does not make a lot of money off of a car that has been donated to the,. An example would be having a car with a fair market value of $2,000. The car may only sell for $500. This would not help you much on your taxes. Although true, there is always around this. Many people choose to donate to a charity that would use the car instead of auctioning it off. Many charities use cars for business. When this happens, you may deduct the market value of your vehicle.
The reasoning behind the above mentioned is simple. When a charity decides to use a vehicle, there is a different category it is eligible for when doing your taxes. When a car is auctioned off, it is often seen as a cash donation. Therefore, if a charity uses your car you can write off the actual car come tax time.
When you deduct the market value of your car, you will get more money at tax time, while doing something good for people in need. There are many online car donation sites. They make donating a car convenient, while taking the guesswork out of what needs to be done.
Donating is a great alternative to selling a vehicle. You can choose a donation company that will donate to a charity of your choice. Take your time to shop around for a charity that will satisfy you. If you choose a car donation service, just call them up and let them know you have the intention to donate. They will pick up your car for you. You will get guidance when it comes to your tax return and you deduction will be fast, simple, and accurate.
