If you are planning to buy a new car and worried about what to do with the older one, here is one great option available for you. Donate your car to charity! This is one great thing you can do for the society and secondly you can earn benefit out of it in the form of tax deductions.
Donating your car or any other vehicle to the charity can be a great way of earning deductions in the tax amount. The government facilitates the tax payers to have deductions in the tax after they give away an automobile to registered charity. This is the most wonderful way of getting rid of old vehicle and still gain on financial basis.
How It Car Donation Tax Deduction Works?
Prior to January 2005, the government facilitated the car donators to take tax deduction based on the vehicle’s market value. Till January 2005, the car donators earned tax deductions on the vehicles market value, without taking into account the size of the car and how it is sold for. Well, determining the market value for second hand car is quite difficult to calculate and thus determining the tax deduction amount was confusing.
In January 2005, the IRS has taken the guesswork out of determining the value of the donated vehicle. It is now very easy to donate a car to charity and earn tax benefits. Simply fill the form and enjoy peace of mind. Your vehicle will be picked up, sold and you are served with 100% tax deductible receipt. If your vehicle is sold for less than 500 dollars then you can claim the fair market value of the vehicle and earn tax deductions accordingly. And if the vehicle is sold for more than 500 dollars, you can claim the exact amount for which your vehicle is sold.
A vehicle donation is actually a terrific way of getting rid old clunker off and helping the charitable organisation. Well, a car donator can also enjoy tax benefits for the car handed over to the registered charity as per the norms set by IRS. Be sure to find the charities that are registered so that your donation can offer you financial benefits. Most important is taking a receipt of the same. Without the receipt you would quality for the tax deduction.
Every year taxes are due. You can reduce the burden of paying huge taxes by doing charity. Donating a car is truly an ideal way of charity. Especially when you are self-employed and aware of the tax burden you have, you can easily get discounts on your taxes. Donate your car to legal charitable trusts and earn tax deductions.