DONATE CAR FOR TAX CREDIT
Giving out cars to
charity has a lot of benefits.
And one of them is
that it gives the donor access to a reduction in tax.
If you include it
in your generous payment reduction you will have a boost in your tax savings.
As a donor, you are
expected by the Internal Revenue Service(IRS) to compute your tax reduction
following either of these ways depending on how the charity makes use of your
donation:
Reductions for
vehicles that are being sold by the charity are limited to the sales payment.
You can as a donor
use the fair market value of the vehicle in most cases.
Below are four easy
guides and cues that will aid you to comprehend and claim a tax reduction on
your tax return for any vehicle that you donate.
1)Firstly, you have
to discover how much the vehicle was sold by the charity.
For instance, if
the vehicle was sold by the charity at auction for $4,000, then your reduction is restricted to $4,000,
whether the fair market value is $5,000.
Nevertheless, if
the vehicle was sold by the charity at a striking bargain to a person in need
or the charity decides to maintain the vehicle for its usage, then the donor of
the vehicle can insist on a reduction for its fair market value.
On the other hand,
If the vehicle is sold at $1000 or less by the charity then you can remove
whichever one is lesser it could be your vehicle's fair market value or $500
For instance, if
$750 is the value of your car, but is sold at $450 then you can remove $500.
Generally,
charities are expected to document the exchange rate of your vehicle to you
using Form 1098-C.
2) Secondly, you
can decide the fair market price of your vehicle.
To compute the
reduction, calculate the fair market price of your vehicle.
To achieve this, it
is recommended by the IRS that a reliable value guide of a used vehicle should
be used to determine the fair market price of the vehicle.
You can also make
research the value of your vehicle based on the brand, condition and variety.
3) Thirdly,
Professing the reduction
To claim a
deduction for the vehicle you are giving out, you will have to provide a record
or report for your donation.
The report which is
gotten from the charity must at a minimum have the following details:
The name of the
donor
The identification
digit of the car
The date that the
donation was made
An affidavit
narrating any welfare and services that were obtained as a result of the
donation.
Furthermore, on
Schedule A, state the percentage of your reduction, since a reduction for your
vehicle can only be claimed if it is documented.
4) Lastly, you will
need an extra form to be able to claim your tax reduction on your vehicle
donation.
If the reduction in
your vehicle is over #500 then you will require a Complete Form 8283.
Ensure you get a
professional to help you do your taxes; so it can be done without errors.
They will just need
you to give them answers to some easy questions to enable them to do the taxes.
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