January 26, 2010
Donating An Old Automobile To A Charity Provides Several Benefits A Part Of A Good Deed And One Of Them Is Tax Deduction - How Much Can You Write Off For A Car Donation
Car Donation Tax Deduction!
Next to needing to contribute to charitable causes, perhaps your biggest incentive to give your car is the substantial tax break it can offer you. Do not be misled by information about your return, because the tax breaks you can get from a car donation may not be the size of you suspect.
If your Purple Heart car donation is worth a lot more than $500, then you must read ‘Revenue Provisions’ in Section 884 of Title VIII. This details the new limitations on car donations worth at more than the already mentioned amount.
How Much Can You Write Off Off For A Vehicle Donation? In A Nutshell, the provision caps the allowable quantity of tax deductions to the gross proceeds received by the recipient ( the charitable organization you give your auto to ) from the sale of your donated vehicle. When you give a vehicle with a claimed price of $500 or more, your tax-refundable amount will depend on the way in which the charity uses the vehicle. For example, if the charity sells the vehicle, then you can only take the quantity of gross proceeds the charity received from the sale. On the other hand, if the charity plans to use the car for tax-approved charitable work as approved by the law, you can claim the car’s fair market valuation.
The same law also requires the charity to give you a written acknowledgment of the contribution within 30 days from the day you make the donation. If your recipient gives you a false or fraudulent acknowledgment, they’re going to face a penalty.
In numerous examples the tax breaks you get from giving your vehicle are sufficient to cover ( or exceed ) the amount you may have sold the car for. Remember that you customarily don’t have to pay for any documentation or dealer costs when you give your vehicle. In the final analysis it is still more sensible to give you auto rather than sell it. This way you do not only turn a profit - you also help deserving causes.