How the IRS Calculates Your Good Will
You are to be congratulated! In a time when others may be holding on to every worldly possession in sight you are considering giving what could be the largest charitable contribution you've ever made. But how does Uncle Sam look at this generous gift? The simple answer is this: the IRS wants proof of how much the charity benefited from the donation.
Believe it or not, when you donate a car to charity what happens to the car after it's picked up by the charity is very important to the IRS. The Internal Revenue Service is attempting to get as accurate a figure as possible representing the benefit of your car donation to the charity. They've set up of a tiered value system with the following rules to arrive at the value of your contribution.
- Up to $500: A vehicle donor can claim a charitable contribution deduction up to $500 of the vehicle's value, regardless of what the charity does with the vehicle.
- Over $500: The tax deduction claimed must match the sale price the charity received when they put the car up for sale, or the fair market value if the vehicle is used to further the charity's programs.
- Over $5000: In the case of the sale of the vehicle by the charity, the sale price is all the documentation you need to claim a deduction of over $5000, in the case of the vehicle being put into use by the charity you will need to obtain an independent appraisal to substantiate your claimed value.
Initially this could be a little bit overwhelming to someone considering donating their vehicle for the first time. However, there's no need to panic, at DonateACar2Charity we've been handling vehicle donations just like yours for over 10 years. If you need more details regarding your particular donation just pick up the phone and dial 1 (877) 505-5775 to speak to one of our experienced operators. You can also browse our site where we've posted a wealth of information about car donations and the most common IRS questions and tax form issues.
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