How to donate your car and gain maximum tax benefit

How to donate your car and gain maximum tax benefit - A simple guide to Donating a car and being prepared for scrutiny from the IRS. The most important thing you can do during your car donation is leave a solid paper trail. What I mean is, when tax time comes and the IRS looks over your return it will be important to have all of your bases covered.

Donating a car, or any high value item can cause the IRS to look closely at a return. Make sure you save all paperwork throughout the process and file it away in a nice folder your tax time. If you are anything like me sometimes tax receipts and documentation tend to end up in a jumbled mess inside a box somewhere. I finally learned that during tax time, there is enough stress. You don’t need to compound it by having a disorderly pile of crumpled up papers.

Cars Valued at over $500.00)   If your car is valued at more than $500 There is a little more you will have in the process of the donation.

• If the Charity will be selling your donation After you donate your car to your desired charity you will have to follow up with them to find out how much the car sold for. They will need to issue you a written acknowledgment of the final sale price of the car. You will then need to attach this acknowledgement to your tax return.
• Will the charity be simply using the car for transporting goods or using it to run the operations of the charity? If this is the case you may need to get an independent appraisal of the car you plan to donate. In some cases you will be able to use a guide such as Kelly bluebook or NADA for this purpose.

Be sure to document the condition of the car you are donating. Take a lot of pictures of the entire vehicle. Make copies of the bluebook value at the time of the sale (just in case the value drops for some reason after). Save the receipts of the new parts you installed on the car prior to the sale and include them with your tax folder.

Also be aware that donating a car and receiving a deduction will require you to Itemize your tax deductions, instead of the standard deduction procedure.

Donate Cars Tips