Car Donation Tax Deduction Overview
As a courtesy for those who are not familiar with how tax deductions work
for a car donation here is a Tax Deduction Overview.
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This web page is about how a tax deduction
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NOTE: The following general overview is not an attempt to give you tax advice nor an attempt to professionally assist you in your personal tax preparation.The purpose here is to just give an overview in layman's terms about how a tax deduction works for a car donation and who might qualify. If you do not prepare your own taxes then you can probably rather easily find out if you qualify for a tax deduction by contacting the person that does prepare your taxes. References to the IRS forms mentioned on this page are available in other areas of this web site.
1. Basic Tax ProcedureThe basic tax procedure for most Americans is as follows:
2. Tax DeductionsThe individual tax payer is allowed certain deductions to reduce their "taxable income." There are two basic types of deductions:
3. Standard DeductionThe IRS provides each tax payer a predetermined (standard) deduction for him/her self and dependents (such as a spouse and/or children below a certain age). In order to receive more of a deduction than the standard deduction(s) the individual must have legitimate deductions that exceed the amount of the standard deduction(s). If the individual's total allowable deductions are less than the standard deduction then the individual would receive the standard deduction.
4. Who qualifies for a tax deduction or tax write-off for a car donation?Basically to qualify for a tax deduction for a car donation (which is called a noncash charitable contribution) your total deductions would have to be greater than the standard deduction you would receive for you and your spouse and children (as applicable).
5. Itemize DeductionsTo be able to deduct these extra deductions you have to list them out completely. This is called "itemizing your deductions." Some of the deductions that would qualify are as follows:
These deductions would be itemized (listed out on the proper IRS forms). If these deductions amount to more than the "standard deduction(s)" then the person would benefit by "itemizing" his/her deductions. In order to get a deduction for a car donation a person has to itemize deductions. For a noncash charitable contribution, such as a car donation, the individual can deduct the value of his or her contribution which is determined by the amount the charity received for the vehicle when sold at auction. The amount the individual can deduct for their charitable contribution can reduce the taxable income by that amount. Here is a similar explanation of this from the IRS.
6. What if you do not Itemize Deductions?You can still receive free pickup and other benefits... Or you might still wish to donate your car to receive the free pickup, to help the charity and thus help children, to dispose of the vehicle, and to avoid the hassle of selling the car. Your vehicle donation can help protect the environment. NOTE: We hope this has been of some assistance. This is not legal or tax advice. This is just some basic information. For more information you should contact the person that prepares your taxes. Visit the rest of this site for all of the other tax deduction information including the actual references on the IRS website. Or fill out the donation form now. Tax Deduction Information and other donation alerts and information.
7. New IRS Tax Law Simplifies the Donation and Tax Deduction ProcedureThanks to the new tax law, the IRS has taken the guesswork out of how to determine the value of your vehicle. Beginning January 1, 2005 you may deduct the full price we receive for the sale of your vehicle. This greatly simplifies the process for you in several ways. Under the new law, if your vehicle sells for more than $500 then the following applies:
If you car sells for $500 or less at auction, you may deduct what you determine as the fair market value of your vehicle or the amount the vehicle sold for, whichever is less, and as long as that figure is under $500.00. Here is the link to the new IRS Car Donation Tax Deduction Publication. We hope you found this information helpful. You can help our charity with a car donation by filling out the online donation form now. |
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