Essential Advice On Car Donation For Tax Reduction
The IRS has taken steps to take the guesswork and confusion associated with car donation tax deduction with a new law. When January 1, 2005 rolled around, you were able to deduct the full price that the charity of your choice receives for the sale of your car.
Many times people were hesitant to donate their car to a charity that so desperately needs the help simply because of the hassle involved in finding the fair market value of their vehicle if the vehicle was worth more than $500. Often the donator had to look up the car they were looking to donate in the infamous “Blue Book” to get an estimate for the fair market value in order to get the full benefits of a car donation tax deduction.
Under the January 2005 rules, your tax break is based on how the charity uses the donated vehicle. If the car is sold, the gross sale price can be deducted. If the charity uses the donated car following the new law for ?significant? charity work that is tax approved, you?ll be able to deduct the market value of the vehicle. However, some stiff penalties will be charged for falsified documents. The law is watching carefully those charities not following the rules and regulations involved with car donation.
Make your donation. After you have made the donation, make sure to ask for a written acknowledgement from the charity. You will need to attach this acknowledgement to your tax return in order to get your tax deduction.
If you do decide to pursue car donation, you will find out that the process is easy. You can contact most charities by phone or online. It is important to ask the charity you wish to get involved with for some specific and important information. This is necessary in order to avoid complications and also be sure you understand the process. It?s not hard, but does require you to fill out some important information and get the car ready.
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