Deducting taxes by donating a car to charity is a really good way to release a little bit the taxes loan and also get rid of some things you would have thrown anyway. In this matter, there are a lot of things you can donate including money itself, but one of the most popular is to donate a car to charity.
It’s easy because you can donate a used car and, of course, the amount of deduction will be determined by the state and sale of the mentioned vehicle. Here we’ll explain to you how to donate a car for taxes deduction.
Step 1: Find out the fair market value of your car
The first thing you need to know is that the deduction from donating your car to charity must respond to the fair market value of your car. This means the price a person would pay for it and that the person selling would accept, taking into consideration the condition, year, and brand of your car.
Step 2: Find a qualified charity to donate the car
If you donate a car to a random charity that is not certified, it won’t get you any deduction so, if you’re looking to decrease the taxes loan, you’ll need to find a qualified charity. For doing this, check the condition “501(c)(3)” that represents the qualified status.
Step 3: make sure you have all the documentation before claiming
Claiming tax deductions for donating a car has its tricks starting with a difference In the documentation if you donate a car worth more or less than 500$. If it’s 500 or less, all you need is a statement from the charity depicting its name, the car’s description and a willing declaration that it was a gift, then you can claim. On the other hand, if the car’s fair market value is more than 500$ it’s a little bit harder to claim as you’ll need to fill the IRS form 8283-section A.
Step 4: claim your deduction
To claim your deduction, you’ll need to itemize your deductions first, which means that you won’t present a standard deduction, but for the items you donate. So this option is actually profitable when you have a lot of deductions to itemize; in another case, the deduction from donating a car could still leaving you paying more taxes than a regular deduction.