Car Donation and Tax Deduction

Looking for a way to get rid of an old car? One way to do this is by selling your car. However, we all know that this can be a very daunting task and with an eight-hour job, is almost impossible to do. Fortunately, there is another convenient and fast way to get rid of your old car and this is through car donations.

A car donation is a good way to help those in need, since it involves donating your car to charity through car donation services. These services make the donation easy and convenient by handling all the related tasks, from picking up your car to the necessary paperwork.

Tax Deduction Donations

To reward charitable donations, the government allows a tax deduction provided that donations are classified tax deduction donations, and a car donation is one of them. In the past, a tax deduction was based on the fair market value of the donated car. But then the government found out that individuals used car donations for the sole purpose of enjoying a tax deduction. And what was worse was that the claimed fair market values were not always accurate. These values considered only the make and model of the car, and did not consider the car’s depreciated state. So what usually happened back than was that the gross sales amount of the donated car did not match the claimed fair market value and the tax deduction was a bloated value.

Revised Legislation

To correct this, the federal legislation governing car tax deduction donations was revised in 2005. But before you understand how the tax deduction from car donations is considered, you must first understand these two types of amounts:

• Gross Sales Amount. Car donation services usually sell your donated cars at auctions. The amount of the proceeds is what is called the gross sales amount.

• The fair market value of your donated car is the value that you and the car donation services agree upon.

The car tax deduction donations legislation generally allows the gross sales amount not exceeding $500 to be used as a tax deduction.

However, the car tax deduction donations legislation is not limited to the gross sales amount. An amount equivalent to the fair market value of the donated car can be used as a tax deduction provided that two conditions are met.

If the car is directly used for the charitable institution’s causes: either used for their operations or donated for use to a needy individual or family, then the fair market value of the donated car can be used as the tax deduction. Another fair market value tax deduction condition is when the car donation services do any improvements on the car before its sale or donation. Moreover, the tax deduction using the fair market value of the donated car is not limited to $500. So if you donate a car, you may want to go with a car donation services that will use it directly for charitable causes especially if your car is in good running condition. But it should be said that the greatest benefit from a car donation is the opportunity to help those who are in need and not the tax deduction.

To be able to claim a tax deduction from a car donation, an acknowledgment receipt should be attached when you submit your income tax return. This AR should contain details such as your tax identification or social security number and the vehicle identification number. If your tax deduction claim is based on the fair market value, the AR should also contain details on the car’s intended use and or the improvements done.

Motor vehicle or car donations is the best way of Tax Deduction Donations. Car donations are eligible for fair market value tax deductions under the new tax laws when donated to programs such as that offered by United Society. United Society Donations is best source for Car Donation Tax Deduction program.

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Car Donation Tax Deduction - 3 Best Tips to Help You Donate Your Car

If you're thinking about donating your car or truck to a local or national charity, here are a few tips that you should know. There are a few problems you can avoid if you do a little research first. Ultimately your goal may be to gain a good car donation tax deduction. The change in the tax laws make it easier now to get a good deduction.

1. How the car donation charity uses your donated car. Decide whether it's important to you or not if you know how the charity is going to use your car. If so, you may want to give them a call. They may sell it on a used car lot they maintain or farm it out to a charity car donation program or sell it on their own car lot. They may use the car to transport people or goods for their charitable work. Or they may give the car to a needy individual.

2. How much money will the charity actually get from you car donation. If the charity plans to sell the car it will probably not get the 'blue book' value of the car. There also will be expenses directly related to the sale - newspaper classified ads or their car lot costs, both which will reduce the negotiated selling price

If they farm it out to a car donation charity program, they've contracted with, to sell then they will get a lot less for it. And of course if they use it themselves or give it away then their won't be a monetary gain.

3. Before you donate your car to any charity you want to make sure it's a legitimate charity. If it's a large national organization then there will be less of a problem. If it's a local charity then you may have to do some checking. You want to make sure they're eligible to receive contributions that are tax deductible, so you'll receive the car donation tax deduction. So ask them if they have the "letter of determination" from the IRS.

Many charities accept cars, truck, and other vehicles and are not tied into providing you with a tax deduction. Make sure to find this out in advance.

These are just a few of the tips you'll need to know if you plan to donate your car to a charity. Make sure to do a little research first to make sure you understand just how much you may get for your car donation tax deduction if they sell it, give it away or keep it.

For more tips on choosing the best charity car donation, car donation program, used car donation or charitable car donation online and offline go to http://www.Car-Donation-Info.com for charity and tax deduction tips, help, facts, reviews, including information on all types of car donation

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