With tax time right around the corner, remember that donating a car to charity is a great way to get a tax deduction. Every car donation entitles you to a write off, however, exactly how much you claim or how the deduction benefits you can vary depending on the amount the car sells for and on your income bracket.
Here are a few tips to help you better understand how a car donation tax deduction works and what you can expect to claim come tax time.
- All vehicle donations being claimed on your last year’s taxes (in this case, 2014) must have been completed by midnight on December 31st, 2014. Any vehicles donated January 1st and forward count towards your 2015 taxes.
- The amount you get to write off on your taxes for your vehicle donation, depends on several factors:
- If we sell your vehicle for less than $500 either at auction or for salvage, which is common when a vehicle is quite old, or in non-running condition, you can claim a deduction of up to $500. You set the amount based on fair market value for your particular vehicle, but it cannot exceed $500.
- If we sell your vehicle at auction or private party sale and it sells for more than $500, you get to claim the actual sale amount. In that case, we, at Donate a Car 2 Charity, will provide you with a second receipt stating the actual sale value of your vehicle donation. The amount on the second receipt is what you want to claim on your taxes.
- Higher end or newer vehicles valued at more than $5000 require an independent appraisal. The appraisal amount is the amount you are allowed to claim.
- The last type of deduction is the Fair Market Value Deduction. This one is rare and more difficult to obtain. To qualify for this deduction, your vehicle must quality for our Cars 2 Car program which donates safe, reliable and working vehicles to qualifying, low income families and students. In this case, we give you the tax paperwork verifying that the car qualified for a Fair Market Value deduction allowing you to claim the full, uncapped, Fair Market Value on the car you are donating.
We hope this gives you a basic overview of the different types of tax deductions. To find out more detailed information, you can review the IRS’ Guide To Car Donation (publication 4302) or give us a call at 877-505-5665 and one of our representatives will help walk you through the process.
Thank you for choosing to donate your vehicle. Your charitable contributions make our work at Activated Ministries possible. For more information on how to donate a car, click here. To find out more about the programs you help sponsor when you donate a vehicle, visit our website at www.activatedministries.org