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Donating Your Car to Deduct Your Taxes

Donating Your Car to Deduct Your Taxes

Now that you have decided to donate your vehicle and you might like to browse through these small tips to help you in your task.

1. Seek a worthy charity - You can't donate your car to charity if you do not choose what charity you are giving your car away. In choosing a charity try to find if they're accepting cars as a donation and choose only the most reputable charity especially one that could really use a car. It would also help if the said charity is eligible for tax deductions.

2. Steer clear of middlemen - This intermediary advertises their services that can help you give your vehicle away, unfortunately, there's a catch: organizations like this take about 50 percent of the vehicles 90 percent value and the charities often receive a bad deal because of it. Do the transactions you're self personally.

3. Handle things personally - Try delivering the car yourself to the charity that you're going to donate your car. This also will save you and your charity to money that both of you would have used for paying a vehicle delivery service. It is also a great way to show the donation recipients that said the car is actually working.
Donating Your Car to Deduct Your Taxes

4. Transfer ownership of the car - Do insist on the charity that you're going to donate your vehicle that the vehicle must be re-titled to them. This will prevent you from receiving any violations that your car might be involved in so do insist that they sign the donation paper's own space to make it formal. In the event that they refuse to sign in the ownership space just take your car and find another charity to donate to.

5. Calculate your car's value - Whenever you're making any non-cash donations you can be certain that an IRS audit is heading your way. Make a document that states the car's fair market value (FMV) and keeps records of it. Charities mostly sell a donated car and if the said car has a value of $500 the IRS will want some documentary evidence to see how much of the was the car sold so ask the charity for receipts on how much was the car sold.

6. Finish the necessary paperwork - This is for your yearly tax returns. As stated above some monetary value needs some documentation, if the vehicle's value was $500 above you are required to fill in the IRS Form 8283's Section A and if it was more than $50,000 include an outside appraisal must be included as well. Proof of donation from the charity will be needed as well.