The more you hear them, the more you want to help – but this isn’t putting some spare change into Santa’s collection tin outside a department store in December or adding a dollar or two to your purchase at the grocery store to put your name up on a paper balloon of other charitable customers.
This is your car, the one that you paid thousands of dollars for and drove around in every day for years. While most people are willing to give to charities, more than a few pause when it comes to donating their automobile. Though you would love to help, you can’t help but think that selling your car is a much better option.
You Can Save Money With a Car Donation Tax Deduction
Whether you sell it yourself or trade it into the dealership, you know that you are guaranteed money on the spot for the car. Sure, people knot hat car donation tax deductions are available, but most just write it off (no pun intended) as an incentive with no real reward. If you don’t know what you are doing, the deduction route may not be your best option. But we want you to make the most out of your charitable donation, so you can both feel good about yourself and put some extra money in your pocket.First, you’ll want to go to the dealer and see how much they would give you for the car so you have a price to start with. Then, don’t be afraid to give your accountant a call and ask some questions. What’s the process? Would I actually end up getting more money back than if I sold it? Chances are, your accountant is going to throw a lot of information at you that you’re not going to know how to digest.
Car Donation Tax Deduction Information
The condition and age of your car is going to make a big difference, since dealers pay more for newer models in good shape. The first step is to go online and check out the fair market value of your car based on the make, model and year. This is important for you to know because this is the number that is going to determine how much of a tax refund you get. If the dealer gave you a higher price, which they could do in some cases, then you be better off selling it. If you still want to donate it, the next step is to check with the IRS to see if the organization is qualified donation center. Once you find an organization to donate to, you can get started on reporting the donation.A very important point is that you have to itemize the donation on your tax return. If you don’t itemize, you will not get credit for the donation. You then have to record the fair market value of the car – and be careful about this, because the IRS does check! You need to include your receipt from the organization when you hand in your taxes, complete with the date, amount, address and phone number. Depending on the value of your car, you may need to fill out additional paperwork. If it is valued at more than $5,000, you need a separate form that you can get online and from your accountant.
So when it comes to deciding whether or not to donate your car, make sure that you do your homework and see what makes the most sense for you. If you do decide to donate it, pat yourself on the back for doing a good thing and enjoy your car donation tax deduction on your next tax refund!
