When donating a car to charity, there are benefits to the charity as well as you, the donator. What I’m trying to say is, the charity would benefit from the donation in the sense of either auctioning off the car, or using the car for the charity itself to further better their cause, and the benefit to you as the donator is that you can claim a Vehicle Tax Deduction with your next Tax Break.
However, there are a few things to keep in mind when you consider donating your car to charity for the purpose of getting a nice tax break from the taxman. The tax law allows the individual tax payer certain deductions in order to reduce their taxable income. The two basic types of deductions are:
1. The standard deduction which is a fixed amount of money that a person can deduct when filing.
2. There are itemized deductions that falls in a special category which not every individual can receive. Even when a person itemizes their deductions the fixed deduction might be higher.
So the question would be who qualifies for a vehicle tax deduction or a tax write-off? Well, to qualify for a vehicle tax deduction, which is called a noncash charitable contribution, the total of your deduction should be more than the standard deduction that you would receive for you and your family.
For an individual to get a vehicle tax deduction he must itemize deductions. Should the deductions amount be more than the standard deductions the individual might benefit by itemizing his or her deductions. For a vehicle tax deduction an individual are able to deduct the value of their contribution which is normally determined by the amount that the charity receive for the vehicle when sold. That amount will then be deducted and the taxable income will be reduced by that amount.
The fact that you can deduct the full amount that the charity receives simplifies the whole tax process. Should the vehicle sell for more than $500 you will be able to deduct the exact amount that the charity receives. If the vehicle sells for less than $500 the tax law enables you to deduct the amount of $500. This way you will not have to determine the fair market value of the vehicle yourself, which saves time and effort.
But should you get into contact with one of our very professional personnel they should be able to answer all your questions and guide you through the process. Or in case you do not prepare your own taxes you can simply contact the person who does it, and they should be able to find out if you qualify for a vehicle tax deduction.