Here’s How To Claim That Car Donation as a Tax Deduction
- Donations to charity can help reduce what you owe on taxes because you can write them off as deductions.
- You’ll need the price the charity sold the car for before filing your taxes.
- The higher the deduction, the more tax forms you need to include.
Donations can be a great way to way to give to charity while also cutting down on your tax bill. Donations to charity can be written off as deductions using the Schedule A form. Although the Tax Cuts and Jobs Act nearly doubled the standard deduction across the board, people who itemize their deductions, particularly habitual donors, might find their itemized deductions exceed the standard deduction.
When it comes to charitable donations, your car donation tax deduction can be a massive boon on your tax forms. But how do you determine the deduction you can include for yourself when a charity sells your car? Find out how a charitable donation works as a tax deduction.
How To Donate Your Car to Charity for a Tax Deduction
Donating your car to charity can be a mutually beneficial way of adding to your itemized deductions while helping someone in need. You can determine how to fill out your tax forms by answering the following questions.
For How Much Did the Charity Sell the Car?
Figuring out your deduction from a vehicle you donated to charity depends on how much the charity sells it for, not the car’s actual fair market value. If the charity sells the car for $4,000, that’s the limit of your deductibility. Some exceptions allow you to claim the fair market price as your deduction, such as when the charity keeps the car for its own internal use.
Note that if the charity sells the car for less than $500, you can claim the higher market value as your deduction so long as that doesn’t exceed $500, either.
Do I Need the Car’s Fair Market Value?
If you can claim the fair market value of the car, use a reputable source such as Kelley Blue Book.
Where Do I Actually Claim the Deduction?
Using the Schedule A form, write down the deduction on line 17. Try to estimate if your itemized deductions will be greater than the standard deduction so this doesn’t waste time. If you’re filing as single or married but filing separately, it’s more likely a car donation will have a bigger impact on your itemized deductions.
Do I Need Any Additional Forms?
You’ll need to complete Section A of Form 8283 if the donation deduction is more than $500 and no more than $5,000. There is also a separate section if the car sells for more than $5,000. If that’s the case, you’ll also need to obtain a written appraisal.
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