Ensure your car donation is tax deductible
Car Donation Process
Getting a tax deduction form your car donation is a process
There are many people who are trying to get a tax break by making a car donation. Sadly many of those people will not be able to do so. You see there is one thing in particular that is preventing many people from being able to claim tax deductions of any kind. That thing is failing to have an itemized deduction when filing your income tax. You see you can take the standard amount or you can itemize deduction if you have more then the standard amount allows.
Anyway. To help avoid this there is a list you can follow to ensure your car donation is going to be tax deductible.
- Determine if the charity you plan to donate to is a qualified organization. Any time you make a donation to any cause the amount is only deductible if you are donating to a registered non profit group. When I say registered I mean registered with the IRS. There is a database you can access to get a list of all registered non profit groups.
- To be extra careful you can take a look at the state records regarding the charities performance.
- Once you have found a charity you can call them up and start asking some questions. One question is to find out how the donation is used. You want to be sure you support the way the vehicle is being used.
- Like mentioned before you must itemize you tax deductions to take advantage of a tax deduction. Your tax professional can help you with this as I am not an accountant.
- The market value is the amount you are able to deduct. This is different from the book value you would get trading it in at a dealership.
- To calculate the fair market value you can go to Kellys Blue Book and see what is listed there. Remember that a dealership is going to give you the trade in value unless you are able to get then to determine a fair market value.
- Once you have made the car donation you need to have all the documentation you will need. You should have signed the title of the car over to the charity or the car donation service. You should have also got a receipt from the service or directly from the charity for the value of the car donation. Make sure you are getting a receipt from the organization that is non profit. If the car donation service isn't a registered non profit and their name is on the receipt you will not be able to deduct the value of your donation.
With this list you will be able to make a car donation and still be able to get the tax benefits as well.