The tax deduction on donating a car usually depends on the actual amount that you claim for the car. (It cannot be more than the car's current market value though.) Additionally, it depends on how the charity puts your car to use. You can also donate other motor vehicles, like trucks or motor scooters, and even your boat or private airplane, if you wish.
As a tax payer, you need to know the importance of tax laws as lack of knowledge about them can make things a complicated. If you are considering donating your car specifically for tax deduction, then you must itemize the deductions when you file your income tax returns. If you don't do that, then you are not eligible to donate your car for tax benefit.
Tax Benefits Related to Car Donation
If you are keen on donating your car specifically for reducing your tax burden, then you need to take a few things into consideration.
Firstly, you need to find a right charity organization, which will obviously take some time considering it's the first time you are indulging in such a deal. Some churches and charities advertise that they accept used vehicles as donations.
Even searching on the Internet will help you get in touch with charities that can be considered. You can get in touch with them and initiate the proceedings. When you donate your car to charity, make sure that you get a receipt from them.
Also, consult your accountant and let him know that you are donating your car, and ask if there is anything else that you would require other than the receipt.
If you are donating a car which needs repairs, you can opt for a charitable organization that will arrange for your car to be picked up by a towing service. In fact, these organizations will also be apt in answering all your queries and will help you complete the process.
You also need to know the current market value of your car. This is a price at which the purchaser is happy to buy and the seller is happy to sell. You can refer to the Internet to find out the current value of your car make and model. Once you have gathered the accurate value, print a copy of it. You will get a tax deduction based on the car's market value.
While your prime motive will be to get benefits on your income tax, you can feel good about doing some charity. It is one of the most impressive efforts to help those who are not as fortunate as you are.