Is My Car Donation Made in Louisiana Tax Deductible?
According to the website Goodwill Car Donation, donating your car to a Louisiana charity is not only a wonderful way to contribute to a good cause, but it can save you money on your next tax return. Tax deductions are available to any Louisiana car donator, but a few rules must be followed in the process.
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Where to Donate
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In Louisiana, finding a place to donate your car is easy, but if you want a tax deduction out of it, you need to do your research. Only Louisiana charities that are registered with the state's Attorney General and classed as a 501(c)(3) organization by the Internal Revenue Service can guarantee car donation tax deductions. For a link to the IRS and Louisiana listing of all qualified charities, see Resources.
Transferring Your Title
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Once you have found a reputable and tax-deductible eligible charity, the next step is to obtain a copy of your Louisiana car title. If you have lost your title, you can obtain a copy at the Louisiana Office of Motor Vehicle Licensing website, which is provided in the Resources. The website Goodwill Car Donation recommends signing a title transfer on your own, even if the charity offers to do it for you. You should also avoid liability by removing your license plate before handing the car over to the charity.
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Determining Your Deductible
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In Louisiana, the amount of money your car is worth at the time of your donation will dictate how much you can deduct on your federal tax return. The only caveat is that you cannot deduct more than 50 percent of your annual adjusted gross income. Known as a fair market value, or FMV, your car's worth is based on its private sale price in the current market, and not the dealer retail value. For a link to the Kelley Blue Book website, as well as an IRS guide on determining FMV with a blue book, see Resources.
Filling out the Tax Forms
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All Louisiana car donators must fill out Form 1040, Schedule A to obtain a tax deduction. If your car's FMV is $250 or less, you only need a charity donation receipt, which does not need to be submitted but should be kept in your records. If you car is valued at more than $500, you must fill out and submit Form 8283 Section A and a copy of the donation receipt to the IRS, while cars worth more than $5,000 require Form 8283, Section B, a copy of the receipt, and a written appraisal of the car's worth at the time of donation.
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References
Resources
- Photo Credit car image by Brett Bouwer from Fotolia.com
