How to Donate Your Car to Charity and Get Tax Deduction
If you have a car that you want to get rid of, you should consider donating it to charity for the tax breaks the Internal Revenue Service offers for donated vehicles. The value of your tax deduction will depend on how your car is used by the charity and what tax bracket you fall into. The higher your tax bracket, the higher the savings on your taxes. However, the tax deduction is an itemized deduction, meaning you must forgo the standard deduction if you claim it so it should only be claimed if the total of your itemized deductions exceeds your standard deduction.
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Instructions
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Confirm that the organization that you wish to donate your car to is a qualified charity according to the IRS by looking it up in the IRS's online database of charities (find a link in Resources). If you give your car to a non-qualified organization, you cannot claim a tax deduction.
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Request a receipt from the organization to document your donation. The receipt must document your name, the charity's tax ID number, the charity, the car and its vehicle identification number (VIN). If the charity immediately sells the car to raise money, the sales price must be noted. If the car is used by the charity, the fair market value should be included. If the fair market value of the car exceeds $5,000, you need to have the car appraised.
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Report the amount of your donation on line 17 of your Schedule A, non-cash gifts to charity. The amount you can deduct equals the fair market value if the car was used by the charity or the amount it was sold for if it was sold without being used. If the value exceeds $500, you must also file form 8283.
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Complete form 8283, section A if your donation is between $500 and $5,000. If your donation exceeds $5,000, complete section B of form 8283.
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References
Resources
- Photo Credit tax forms image by Chad McDermott from Fotolia.com
