Donating a car not only lets you help those people who are in need; you also get to enjoy a tax deduction. The amount will all depend on how much your car is valued, as well as the charitable contribution deduction.
Read on to get some tips on making your tax deductions bigger when donating a car to charity.
Ask the Charity How Much They Sold Your Car
The charity can either sell your car or use it for their operations. If the charity said they sold your car, ask them how much they were able to sell it for. For example, if they were able to sell the car for about $3,000, then you will most probably get the same amount of deduction.
If the charity was able to sell the car to an indigent person or they kept it for the office’s own use, then you may claim the deduction for the fair market value.
Know the Market Value of Your Car
Research online and look for a reputable used car price guide. This will help you reassess the tax deduction that you will receive. Go to your local library and see if you can find the most recent copy of the Kelley Blue Book. This usually has the private party prices for your specific vehicle based on the model, make, and its overall condition. If you cannot find the said book, then try searching for it on the Internet.
Get the Forms and Fill Them Up
Get the necessary forms and fill them up before donating your car. Fill up the Form 8283 and determine which section you need to fill up. For example, if your deduction is more than $500, then fill up the whole form. If your deduction is between $501 and $5,000, then fill up Section A. If your deduction is more than $5,000, you must fill out Section B.
Always ask the IRS which forms to complete and submit before donating your car. Do not be afraid to ask and do your research when it comes to the tax deduction. Remember that the more you know, the higher the tax deduction you may get.