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How Do I Estimate the Value of My Donated Car for My Revenue enhancement Deduction?

Updated for Taxation Year 2021 • October xvi, 2021 08:20 AM

OVERVIEW

Deducting your car donation can relieve you a significant amount of income tax.

vintage car wheel and bumper sticking out of a full covering
Donating your car to charity can be a practiced deal for both you and the organization you give it to. A charity may keep your vehicle for its own use, donate it to someone in need or sell it to obtain the greenbacks. Deducting your car donation tin can save you a significant amount of income tax; however, the IRS increased the documentation requirements you must attach to. To avoid having the IRS question your deduction, be sure to follow the guidelines and keep every document that proves your donation.

Step 1—Detect a qualified charity

The most important step in deducting the value of your automobile donation is to insure the charity you donate information technology to is an IRS tax-exempt organization. But the donations you lot make to these types of organizations allow you to merits the deduction. Generally, these include religious groups, charities and organizations that promote instruction, literacy, scientific or humanitarian causes.

Step 2—Judge the value of your motorcar

Look upwards the off-white market value of your motorcar in a used-car guide such as the Kelley Blue Book. Find the make, model and yr for your auto and employ the listed private-party value for the overall condition of the vehicle. For example, if the body is dented, the air-conditioning doesn't work and it has excessive mileage, information technology's unreasonable to estimate the off-white marketplace value using the price for a car in "excellent" condition.

Step 3—Determine usage

Find out how the arrangement intends to use the motorcar. If it'south going to sell the car, the IRS limits your deduction to the sale price, even if it's below the market value. Even so, if information technology sells for $500 or less, you lot tin can claim a deduction for the lesser of its off-white market place value or $500. If the organization plans to keep the auto, then you can deduct the value you found in the used-machine price guide. If that value is greater than $five,000 and the charity doesn't sell the machine, then the IRS requires you to obtain a written appraisal before challenge a deduction.

Step iv—Acquire documentation

Ask the charity for documentation. If it sells the car, IRS rules state that information technology must inform you of the sale amount inside 30 days, more often than not on a Grade 1098-C. Regardless of whether information technology keeps or sells the car, the organisation must provide you with a written acknowledgement that serves as your proof of the donation. At a minimum, the document must include your name and Social Security number, the vehicle identification number, the date of contribution and a statement that either lists all appurtenances and services you receive for the donation or confirms that you received zippo. If you do receive something of value from the organisation, you must reduce your deduction past its value.

Things yous'll need

IRS Publication 78
Documentation from the charity

Tips

Your donation is not complete until you transfer the motorcar'southward title to the charity. This likewise ensures you lot won't be held liable if the motorcar racks up parking tickets.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not requite personalized tax, investment, legal, or other business organisation and professional person communication. Before taking whatsoever activeness, you lot should e'er seek the aid of a professional who knows your particular state of affairs for advice on taxes, your investments, the police force, or whatsoever other business organization and professional matters that affect you and/or your business.