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The Tax Benefits of Donating a Vehicle

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<html> <head> <title>The Tax Benefits of Donating a Vehicle</title> </head> <body> <h1>The Tax Benefits of Donating a Vehicle</h1> <div class="info">Author: <a href="http://www.goinglegal.com/author_1_109672.html">Roni Deutch</a></div><div class="body">Donating a car is a great way to help out a charity of your choice while, at the same time, lowering your tax liability. However, over the past few years the IRS has cracked down on vehicle donations, after decades of abuse. This article explains how to claim a vehicle donation on tax returns without leading to IRS troubles.<br /> <br /> Selecting an Organization <br /> <br /> One of the most important steps in donating a vehicle is choosing a qualified charity. Although you might want to help a specific organization, in order to claim the charitable contribution deduction you will need to donate your vehicle to an organization that is qualified by the IRS. You can use IRS Publication 78 to find a qualified charity, or just ask the organization if they have proof of their tax-exempt status. <br /> <br /> Fair Market Value <br /> <br /> Before you donate the vehicle, you will need to determine the fair market value of your car for tax purposes. Be sure to document the condition of your vehicle, and get estimates from a handful of sources. Make sure you find substantial proof to support the value you assign to the car. <br /> <br /> Deduction Amount <br /> <br /> The deduction you can claim for your vehicle depends on what the charity does with it. If the organization auctions off the car, then you should claim the amount that the vehicle was sold for. However, in some cases charities will give away vehicles to low-income families, or sell it for significantly less than fair market value. In these instances, the IRS will allow you to deduct the fair market value of the vehicle, but you will need proof of both how you determined the value, and proof that the charity sold the vehicle for less than fair market value. <br /> <br /> $500 Rule <br /> <br /> If your vehicle is valued at under $500 then you can either take a deduction for the fair market value. However, if you intend to take a deduction for over $500 then you will want to be more cautious. IRS rules specifically say that the deduction is limited to the charity's actual selling price if it exceeds $500. Therefore, even if your vehicle is valued at $2,000, if the charity only sells it for $1,500, you cannot claim a deduction for more than $1,500 on your tax return. Additionally, if the vehicle is valued at over $5,000 then you will need to get a private appraisal before you make the donation. <br /> <br /> Charitable Deduction Limits <br /> <br /> The same IRS rules that apply for other charitable deductions also apply to car donations. For example, your deduction cannot exceed 50% of your adjusted gross income. If you are unfamiliar with the IRS' rules for charitable deductions then check out IRS Publication 526. <br /> <br /> Itemizing <br /> <br /> If you do decide to donate a vehicle, you must itemize your return to claim the deduction. Therefore, if you claim the standard deduction then you cannot claim a charitable contribution deduction for your donation<br /> <br /> The Tax Lady <a href="http://www.youtube.com/watch?v=JBkeYAW6Nnk">Roni Deutch</a> and her law firm <a href="http://www.ronideutchirs.com/"> Roni Deutch, A Professional Tax Corporation</a> have been helping taxpayers across the nation find IRS tax relief for over seventeen years. The firm has experienced tax lawyers who can fight tax debts on your behalf.</div> <div class="source">Article Source: <a href="http://www.goinglegal.com/the-tax-benefits-of-donating-a-vehicle-1759567.html">http://www.goinglegal.com/the-tax-benefits-of-donating-a-vehicle-1759567.html</a></div> <div class="author"> <div class="authorBio"></div> </author> </body> </html>

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The Tax Benefits of Donating a Vehicle Author: Roni Deutch Donating a car is a great way to help out a charity of your choice while, at the same time, lowering your tax liability. However, over the past few years the IRS has cracked down on vehicle donations, after decades of abuse. This article explains how to claim a vehicle donation on tax returns without leading to IRS troubles. Selecting an Organization One of the most important steps in donating a vehicle is choosing a qualified charity. Although you might want to help a specific organization, in order to claim the charitable contribution deduction you will need to donate your vehicle to an organization that is qualified by the IRS. You can use IRS Publication 78 to find a qualified charity, or just ask the organization if they have proof of their tax-exempt status. Fair Market Value Before you donate the vehicle, you will need to determine the fair market value of your car for tax purposes. Be sure to document the condition of your vehicle, and get estimates from a handful of sources. Make sure you find substantial proof to support the value you assign to the car. Deduction Amount The deduction you can claim for your vehicle depends on what the charity does with it. If the organization auctions off the car, then you should claim the amount that the vehicle was sold for. However, in some cases charities will give away vehicles to low-income families, or sell it for significantly less than fair market value. In these instances, the IRS will allow you to deduct the fair market value of the vehicle, but you will need proof of both how you determined the value, and proof that the charity sold the vehicle for less than fair market value. $500 Rule If your vehicle is valued at under $500 then you can either take a deduction for the fair market value. However, if you intend to take a deduction for over $500 then you will want to be more cautious. IRS rules specifically say that the deduction is limited to the charity's actual selling price if it exceeds $500. Therefore, even if your vehicle is valued at $2,000, if the charity only sells it for $1,500, you cannot claim a deduction for more than $1,500 on your tax return. Additionally, if the vehicle is valued at over $5,000 then you will need to get a private appraisal before you make the donation. Charitable Deduction Limits The same IRS rules that apply for other charitable deductions also apply to car donations. For example, your deduction cannot exceed 50% of your adjusted gross income. If you are unfamiliar with the IRS' rules for charitable deductions then check out IRS Publication 526. Itemizing If you do decide to donate a vehicle, you must itemize your return to claim the deduction. Therefore, if you claim the standard deduction then you cannot claim a charitable contribution deduction for your donation The Tax Lady Roni Deutch and her law firm Roni Deutch, A Professional Tax Corporation have been helping taxpayers across the nation find IRS tax relief for over seventeen years. The firm has experienced tax lawyers who can fight tax debts on your behalf. Article Source: http://www.goinglegal.com/the-tax-benefits-of-donating-a-vehicle-1759567.html About the Author:

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The Tax Benefits of Donating a Vehicle

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