Money, clothing, and used items are not the only things that can be donated to charities. Vehicles can also be donated to charities that include some benefits not only to the organization but also to the donor.
One notable benefit to a car donor is the significant tax-write off that an individual can receive when donating to reputable car donation charities. If you are planning to donate your car and want to learn more details,read on as this article will discuss the essential things you need to know about car donations.
Tax Deductions for Car Donations
Donating your vehicle can result in a healthy-tax write off once you include it in the charitable contribution deduction. Your tax deduction could reach about $150, and even more, if the charity sells your donated vehicle at an auction; based on its fair market value.If you want to maximize the tax write-offs and your benefits, it would be best to do some research regarding car donations and your state tax rules.
Donate to a Qualified Charity
According to an article by USA Today, a piece of important information to always remember is that you can only get tax deductions when you make donations to a qualified charitable organization. This means you should only donate your vehicle to reputable car donation charities to maximize your tax benefits.It is also worth noting that some charities provide better tax benefits and deductions compared to other organizations. Be sure to check out reliable and trusted charities when you donate your car because you can never go wrong with them.
Understanding Fair Market Value of Your Donated Car
According to the Internal Revenue Service (IRS), fair market value is the price that an asset would sell for on the open market. Also, it is the price agreed upon between a willing seller and a willing buyer when relevant facts are known. Information that is needed to determine fair market value include some of the following:Car’s Year. The value of some cars depreciate annually, which is why the number of years that a car has been used plays a significant role in determining fair market value.
Brand. Some car brands, especially imported ones, are more expensive compared to car brands made in the country.
Make and Model. Make and model of a vehicle is significant because some car manufacturers make limited-edition models, which could increase the fair market value of your car.
Mileage. Knowing how long a particular car has been on the road is another important factor when considering fair market value because it is based on the condition of a vehicle.
Why is Fair Market Value Significant?
Knowing the fair market value of your donated vehicle is important because it can determine your deduction value. For instance, if your vehicle's fair market value is $3,000 and you are in the 28% tax bracket, you will save $840 in taxes.However, it is worth noting that you can only claim a deduction for fair market value if the charity keeps the donated car for their use or if the charity sells the vehicle to a needy individual.
Donating a vehicle to charity can undoubtedly benefit you because of the tax-write offs and financial advantages. Also, you will be able to help a charitable organization in the process by improving their resources so that they can carry out their mission.
