How Do Tax Deductions Work When Donating a Car?

donate your car to charity can lead to significant tax savings, if included in your donation deduction. However, a little planning will ensure that the tax savings to maximize your donation. The Internal Revenue Service (IRS) requires your deduction in one of two ways to calculate, depending on how love using your gift. deductions for charitable sold cars are limited to the selling price. In all other cases, you can use the car's market value.

Step 1: Learn to love the car sold for

the price of love is to use your car in an auction that the amount of your deduction. For example, if your love of the hood the car sold at auction for $ 3,000 to $ 3,000 limited even if the market value is $ 4,500. However, when sold to love the car at a price to someone in need, or the car stops for internal use, then you can claim a deduction for their normal market value.

Step 2: Determine the market value of the car

The IRS suggests that you use reputable car price list used to calculate your deduction, if the market value is used. For example, going to the local library and get a current copy of Kelley Blue Book. Search private party price depending on your vehicle model and condition. This type of research can also be done on the Internet as.

Step 3: Claiming the deduction

Enter the amount of your deduction on line 17 of Schedule A. As you can not claim a deduction for donating your car, if you itemize, the sum of all your eligible expenses exceed in Annex A to the amount of the standard deduction for your civil status.

If you use TurboTax to prepare your taxes, we will determine which filing status is to get the biggest tax savings.

Step 4: Additional forms you need

Complete Form 8283 if your deductible car donation is over $ 500 if your claim is between $ 501 and $ 5000 must complete Section A. If your deduction is more than $ 5000, you must complete Section B if B section is fulfilled, must also receive a written evaluation and documentation.

if you use TurboTax, simple questions again, and we will for you to complete all appropriate forms.

Advice

If the love of your car sells for $ 500 or less sold, you can deduct $ 500 or the market value of the car is less. For example, if your car has a value of $ 650 but sells for $ 350, you can deduct $ 500th
Most charities will be the selling price of the report of the car so that the 1098-C form.

warnings

You must have documentation of your donation. At least received the charity's documentation must get your name, vehicle identification number, date of issue and a statement describing the goods and services, if any, belong.