In this article, you will discover 4 simple steps to donate your car to charity and get the maximum from your car donation tax deduction. Although there are many reasons to do so, one of the benefits of donating your car to charity is significant tax savings. These tax deductions can be maximized with proper planning.
If you want to enjoy the full benefits of your car donation, use these 4 tips to donate your car charity.
- Car Donation Tax Deduction
The amount the charity got from the sale of your car should be used as the amount of your deduction. You can only claim a deduction for its fair market value when the charity sells the car at a significant discount to a needy individual or keeps the vehicle for its own internal use.
- Determine Your Deduction
Before you donate your car, it is important to determine the car’s fair market value. The IRS suggests that a reputable used-car guide should be used to calculate your deduction when the fair market value is used. This will help you to determine the amount to use as tax deduction.
- Claiming Your Deduction
Amounts of tax deductions should be reported on line 17 of Schedule A. You should make sure the total of all eligible expenses on schedule A exceeds the standard deduction amount for your filing status. This is done because deductions can only be claimed when car donations are itemized.
- Car Donation Tax Deduction Forms 8283
If your donation deduction is less than $500, you’ll need to complete IRS Form 8283. For deductions between $501 and $5,000, you must complete section A of IRS form 8283. For those greater than $5,000 section B of IRS form 8283 must be completed.
Note that a written appraisal of documentation must also be obtained if you complete Section B.
- Attach 1 or more Forms 8283 to Your Tax
IRS Form 8283 allows you to claim a deduction for the value of all property you donate to a qualified charity during the year provided you are eligible to itemize deductions. When filling your return, attach one or more Forms 8283 to your tax return if you claimed a total deduction of over $500 for all contributed property.
With these tips to help you donate your car, you will get all the satisfaction that comes with helping a charitable cause as well as all the tax deduction benefits associate with car donation.
If you know other simple means to donate a car to charity, kindly comment below to share them with our readers.