DONATE CAR FOR TAX CREDIT

 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.