Donating your car or vehicle to charity can be a great way to get a tax deduction.
It’s not hard to claim the maximum tax deduction for your car donation. Here’s what you have to know.
Prior to January 2005, the IRS was allowing people who donated to a qualified car donation program to take a tax deduction based on their vehicle's market value no matter how much or how little the vehicle sold for. Determining the market value of a donated vehicle is often quite difficult and time-consuming, which made determination of the amount of the tax deduction confusing.
In 2010, if you donate a car to charity, subsequent policies utilize:
It’s not hard to claim the maximum tax deduction for your car donation. Here’s what you have to know.
Prior to January 2005, the IRS was allowing people who donated to a qualified car donation program to take a tax deduction based on their vehicle's market value no matter how much or how little the vehicle sold for. Determining the market value of a donated vehicle is often quite difficult and time-consuming, which made determination of the amount of the tax deduction confusing.
In 2010, if you donate a car to charity, subsequent policies utilize:
- The vehicle you donate cannot be one particular that is held by you primarily for sale to other people, this sort of as the inventory of a employed automobile whole lot
- If the charity to which you donate the auto sells the car, your deduction may possibly not exceed the gross proceeds of the sale.
- If the car sells for $500 or significantly less, you could deduct $500 or the reasonable marketplace worth of the motor vehicle on the date that you make the contribution, whichever is reduce.
- You will need to meet certain record holding and filing prerequisites in purchase to acquire a deduction that exceeds $500.
- If the charity offers or sells the vehicle instantly to a needy particular person at a selling price appreciably under the reasonable marketplace worth as portion of the charity's stated mission, you may be in a position to deduct the vehicle's fair industry appeal on the date of the donation.
- If the charity states that it intends to make a content development to the car just before selling the car, you may well be ready to deduct the fair industry worth of the motor vehicle.
- If the charity intends to continue to keep the auto and use it as element of its mission for a substantial length of time, you could be capable to deduct the fair sector value of the car.
