Car Donation Tax Deduction Simplified?
Charitable contribution gets you tax deduction . So the car donation tax deduction mean that you can claim itemized deduction on donation of car to a charity. However , before you claim deduction for this charity gift , you must fulfill certain conditions . These are :
Check if charitable organization is tax exempt?
The deduction is available only if the car donation is made to an approved charitable organization. So ask the organization for the IRS approval letter. The second method of verification if an organization is tax-exempt, through the IRS search tool.
Do you qualify for the car donation tax deduction ?
Two most important rule to know about claiming the car donation tax deduction is that you can get deduction only if you itemize deductions on your Schedule A of Form 1040.
Secondly , the total itemized deduction cannot exceed 50% of your adjusted gross income.So , if other deductions have already fulfilled this condition ( i.e more than 50% of AGI), then there is no room for any deduction for the car gift to charity.
How much can you deduct for a car donation?
The tax deduction is equal to amount of fair market value of the car that you donated. As a general rule,
- if charity sold your car, the amount of sale is the claimable deduction.
- if charity keep the car for its own use,you can get deduction for a value which is less than Blue Book value.
Therefore, if car donation value is more than $500 , get a valuation certificate to ward off any controversy from IRS side
File taxes with Documents/Form
- No form or doc required with your tax return if your car is sold for less than $500. However ,a written acknowledgment from the charity is a must if the total deduction you are claiming for a donated car is $250 or more .
- If car donation value is more than $ 500, you need to attach following documents :
- 1. IRS Form 1098-c.
- 2. IRS Form 8283 Section A if value is more than $5000
- 3. For e-filing – Form 8453
- 4. A written appraisal of the vehicle’s value.