2015 Car Donation Tax Deduction – Get The Maximum Tax Benefit Out Of Your Vehicle Donation
Charitable tax deductions if you donate your car to charity, can be a big plus come tax season and this can be your guide to donating a car for tax credits.
In order to be deductible, your donation must have been made to a qualified organization. Make sure the receiving organization is qualified by checking the IRS site, or calling the IRS at 1-877-829-5500.
Donating your car to charity can be one of the best ways to get a tax deduction. Here is how car donation tax deduction work.
Tax Benefits – Donate your car to Charity
Before January 2005, the Internal Revenue Service was allowing people who would donate a car to a qualified car donation program, to take a tax deduction that was based on their vehicles market value, no matter how much or how little the vehicle sold for!
The key is determining the market value of a donated vehicle. Its very difficult and time-consuming, which made it confusing. After Jan 2005 a new tax law went into effect and the IRS has taken the guesswork out of determining the value of your donated truck, car RV, boat or any other vehicle.
The Internal Revenue Service allows the tax payer to claim a charitable tax deduction as follows:
If your donated car is sold for less than $500, you can claim fair market value of your vehicle up to $500 or the amount it is sold for if less than fair market value.
If your donated car sells for more than $500, well now you can claim the exact amount for which the vehicle is sold!
Whatever the case, you will receive a 100% tax deductible receipt at the time that your car is sold, stating the amount of the sale.
And for any vehicle sold for more than $500 dollars, the exact amount the vehicle is sold for will be stated on your notification mailed to you, which will in turn be your charitable tax deduction. The Internal Revenue Service provides “A Donor’s Guide to Car Donations“, which details the value of your donated vehicle.
FAQ – Donate your Car to charity – Tax Questions
Question: Will my vehicle donation be good for the year that I sent in the donation form, even if I don’t receive the receipt until the beginning of the New Year?
Answer:: YES! “A Donor’s Guide To Vehicle Donations” states: “… the written acknowledgment must contain the date of the contribution…” So the date of the contribution is the date that we received the donation form. So it can even be on the 31st of December and will still allow a charitable vehicle deduction for that tax year.
Question: Does the donation count toward the year I submitted the online form even if the vehicle isn’t picked up until the new year?
Question: I’ve heard some charities and other organizations offer vacation packages as incentives to donate. Will that effect my tax deduction?
Answer: YES! If a charity provides any commodity like a vacation package in exchange for a car or vehicle donation, then the tax receipt from the charity must state the fair market value (FMV) of that commodity and the fair market value (FMV) of that commodity must be subtracted from the value of the car donation!
Example: Let’s say your vehicle sells for $1,500.00 at auction and your vacation package that you receive has a fair market value (FMV) of $500.00, you can only deduct $1000.00. That’s $1,500.00 for the donated car less $500.00 for the vacation package resulting in a maximum deduction of $1000.00 ($1500.00 – $500.00 = $1000.00)
Donations over $250
If you want to donate your car to charity and it’s over $250.00, you must have documentation from the charity when you file and if the donation was in cash, the amount should be noted.
Vehicle Donations – donate your car to charity
The write off for your donated car depends on how the charity or organization uses it. When you donate a vehicle, the IRS gets a copy and checks car donation specifics closely.
Are There Donations You Can’t Deduct?
You may not deduct contributions made to specific individuals, candidates and political organizations according to the Internal Revenue Service. If you’ve received something such as “show tickets” because of your contribution, then you may only deduct the amount that exceeds the (FMV) fair market value of the item, according to the IRS.
Eight Tips for Deducting Charitable Contributions and to donate your car to charity
From the IRS Website – Donate your car to charity!
Charitable contributions made to qualified organizations may help lower your tax bill. The IRS has put together the following eight tips to help ensure your contributions pay off on your tax return.
1. If your goal is a legitimate tax deduction and you want to donate your car to charity, then you must be giving to a qualified organization. Also, you cannot deduct contributions made to specific individuals, political organizations and candidates. See IRS Publication 526, Charitable Contributions, for rules on what constitutes a qualified organization.
2. To deduct a charitable contribution if you donate your car to charity, you must file Form 1040 and itemize deductions on Schedule A.
3. If you receive a benefit because of your contribution such as merchandise, tickets to a ball game or other goods and services, then you can deduct only the amount that exceeds the fair market value of the benefit received.
4. Donations of stock or other non-cash property are usually valued at the fair market value of the property. Clothing and household items must generally be in good used condition or better to be deductible. Special rules apply to vehicle donations.
5. Fair market value is generally the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.
6. Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution. For text message donations, a telephone bill will meet the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution, and the amount given.
7. When you donate your car to charity in order to claim a deduction for contributions of cash or property equaling $250 or more you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more. If your total deduction for all noncash contributions for the year is over $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return.
8. Taxpayers who donate your car to charity or donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser.
For more information on charitable contributions, refer to Form 8283 and its instructions, as well as Publication 526, Charitable Contributions. For information on determining value, refer to Publication 561, Determining the Value of Donated Property. These forms and publications are available at http://www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
Finding a Charity – donate your car to charity
The choice is yours, but before donating your vehicle, confirm that your charity or organization of choice is recognized by the IRS. Otherwise, your deduction from your donation, will be rejected. If in doubt, check the IRS’s Cumulative List of Organizations which lists qualified charities. Unfortunately religious organizations aren’t listed, though they will qualify.
I hope this page gives you the resources to donate your car to charity. Like or share it, if this has helped you!