Donate Car- Are you qualify for Tax Deduction?
If you are planning to donate car to charity, you can get tax exemption easily but first you should make sure of your tax deduction qualification by following IRS guidelines and make the process of donate car hassle free, then you'll maximize the value of your vehicle donation for society and yourself. There are few factors for qualification:
1- First of all, you can only deduct your donate car value, if you itemize deductions in IRS form 1040 Schedule A.
2- Your annual gross income and total contributions
Your deductions can not exceed 50% of your adjusted gross income (line38, Form1040). Sometimes it can not exceed 20% or 30% of gross income. It depends on type of charity and contribution. if you've already made donation 50% of your gross income and you intend to donate car, you can’t deduct your car charity donation for during year. It would carry over to next year tax return. We'll explain more about "Carryovers" in charity car donation article.
3- Type of Tax Limit Charity and Organization
There are different type of tax limit organization, 50%, 30%, 20% even 100%. That means, when you donate car to charity, this specific car donation charity is qualified to give 50% of your annual gross income or 30%, 20% tax deduction. So it’s important to know the charity donation limit. You can easily call them and ask them. Religious, educational, charitable organizations are 50% limit organization for sure. for more information see IRS Publication 52, Limits on Deduction.
Depends on the amount you donate car or automobile to charity and claim as a charitable tax deduction, you may need to get charity document for substantiate your cars donation. So you have to concentrate on the formalities to be completed.
If you claim auto donation deduction more than $250, you must get charity written acknowledgment which verifies name/address of charity, date of donation, where you donate car, description of car.
Deduction between $500 - $5000, plus acknowledgment you will have to fill out Form 8283(Section A) and attach it to form 1040.
For vehicle donation deduction more than $5000, you need form8283(Section B) plus acknowledgment and written Appraisal from qualified appraiser. If you take care of all these issues while you donate car, it should be a wonderful charity donation experience for you.