Donate Your Car To Charity: Tax Benefits of Vehicles for Donation Boat Donation Professionals Helping the poor is one of the noble things you can do to your community. Your participation to the society will uplift the needy no matter how small your act of kindness is. Offering something which could help the needy is one of the many things you can do to uplift their wellbeing. For example, donating cars to non-profit organizations would help the needy perform better in society. The cars we donate can be used by non-profit organizations in their operation to help the needy in our community or they could also sell the cars to fund their charitable work. But there are times when we feel skeptical about this practice because of several reports of unfair practices of some non-profit organizations. Some organizations auction the cars they receive but they only donate small portion of the proceeds to the underprivileged. This is the reason why we are always reminded to select a trustworthy organizations. These groups are sure to give a huge portion of your donation where it really matters. If the proceed of your car doesn't benefit the underprivileged then it defeats the purpose of the gesture behind donating cars. To be sure that your efforts to help the needy will not go to waste, select a charity or group with reputation. Government websites list reputable non-profit organizations that you can choose to donate your cars. Picking from the list will also benefit you later on. On another note, you as the donor will also benefit from the said practice. The government recognizes car donations as acts of goodwill and because of this; it awards citizens with tax considerations. The value of the proceeds can be used as a tax deductible. Individuals can deduct the amount of the proceeds when they file for their tax return. If the car is sold at the asset's fair market value, the owner is allowed to use that value as tax deductible. However, if the car is sold below the FMV, whatever that price is, the amount to be deducted should not exceed that amount. Learn More Here In conclusion, donating cars to charity is one of the sensible ways to dispose old cars because you get to help the underprivileged in your community. Moreover, you get to benefit from the sale because the government will allow you to deduct the proceeds in your tax return. Donating vehicles to charity to take advantage of the tax breaks provided by the government to donors is gaining popularity nowadays among citizens in the United States. Thousands of people engage in the practice because the tax consideration is really beneficial especially when they are able to deduct a big amount. In addition, this practice is also very positive among citizens because the action is indeed very kind. Donating cars to the underprivileged is one way of getting back to the community. These explain why many car owners often donate their old and used vehicles to charity because they can benefit from this financially
and emotionally. Tax Considerations from Car Donations Explained The government particularly the IRS recognizes the goodwill behind donating cars. As such donors are allowed to deduct certain amount in their income tax returns. However, there have been changes as to how an individual can take advantage of this practice. The IRS has created a guide on how a donor can use the deductible amount on his or her tax returns. Here are the guides and their respective examples. Scenario 1 Assuming that the value of the vehicle is only $400, you can only deduct $500 in your tax return. For Vehicles sold or valued less than $500, the donor can use the maximum value which is $500. Scenario 2 If the fair market value of your vehicle to be donated is $4,500 and the charity auctioned it but only received $3,500, your deduction shall not go beyond $3,500. Scenario 3 If the fair market value of the car is $4,500 and the charity decided to use the vehicle for their operation instead of selling it, you can use the $4,500 FMV of the vehicle as tax deductible. Scenario 4 If you donated your car to a charity valued at $4,500 and the latter expressed its intent to use the vehicle as their service but the charity spent $2,000 for repairs, you can only deduct $2,500 in your tax return. So if the nature of your car donation falls in any of these situations, it is important to follow them so you can avail of the tax consideration mandated by the law.
Published on Mar 3, 2013