Donate A Car To Charity To Lower Your Taxes
It has never been easier to donate a car to charity to reduce your tax payable. It is no longer something only rich people do to minimize their taxes, anyone can do it with a bit of effort. The tax office requires you to keep all receipts and records of course, but if you do this, there should be no problems.
Although it is not the main source of their donation intakes, charity organizations have relied on donated items for quite some time. The General Accounting office released a report in 2003 showing that car donation accounted for only around six per cent of charity organizations donations.
The self-employed are in an especially good position to take itemized deductions of monies turned back into the business as well as legitimate car donations. A charity that is sanctioned by the IRS and has a legitimate non- profit tax ID number should be more than able to provide you with the forms you need to make your deduction with the same confidence as any other type of deduction you save a receipt for.
It is not unusual for a taxpayer to decrease their tax bill by up to forty per cent by taking the time and effort to keep accurate records.
Donating a car to charity is a viable method of reducing your taxes by using the value of the donation to put you into a lower tax bracket. As the amount of the tax savings can be substantial, there tends to be a flurry of car donations to charities as the end of the tax year gets closer.
As a rule of thumb, the sale value will be nowhere near the value it is listed as having in the Kelley Blue Book. This is due to the charity selling the car onto the wholesale or scrap markets. The IRS requires you to keep a receipt showing exactly how much the charity was able to get for the car, if the amount is over $250.
It is always a good idea to talk to a CPA, especially if you already have the services of one retained for your regular tax preparation advice. If you own a business, this is especially true. Even the same car donation to charity can vary greatly in its value to an individual’s return.
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