Maximizing Your Tax Deduction Through A Car Donation
Looking for a way to maximize your tax deduction, donate to a charity, AND get rid of that car you've been saying you'll fix? Don't worry- we have you covered.
Learning the Tax Deduction Basics
When we talk about car donation tax deductions or any other form of write-off, we typically think of income tax – and more specifically, federal income taxes. But there are many, many types of taxes.
Some of the taxes we are required to pay under various circumstances include:
processing tax, assessment tax, tolls, excise, custom, levy, impost, duty, revenue tax, tariffs, tribute, dues, capital gains, capitation, tithe, towage, salvage, wharfage, brokerage, freightage, poll tax, income tax, sales tax, property tax, excise tax, inheritance tax, cigarette tax, meals tax, gift tax, state and local taxes, Social Security taxes, and Medicare taxes.
When we think of easy tax deductions our minds often go to such ideas as a clothing or home goods contribution to Goodwill or Salvation Army. If you cleaned out a cupboard or closet recently, you may have taken a box or two to a charity and taken home a receipt. It’s not as much money as you write off with a car donation tax deduction – but it’s something.
Need some more information? Consult the IRS regulations website for specifics – they guide you through steps in the tax deduction process. There are specifics about the value of your clothing and household donations – they each have a dollar value that you’re allowed to claim on your tax forms.
The Tax Benefits of Car Donations
The IRS never sleeps, so neither can we. It pays to look for every method available to reduce your tax base and then share those ideas with family and friends so everyone can improve their portfolios. If you have a CPA, you probably get schooled on the procedures yearly, or even monthly if your firm keeps you updated through email blasts or newsletters.
Rules change constantly about write-off percentages or frequency of tax obligations. It is always a good idea to follow the changes, in terms of such benefits as car donations for tax receipts.
What you need to improve your tax return is between you and your accountant, of course. They are the best source of information regarding the credits, write-offs, or deductions you need. But a car donation for tax benefits through Cars2Charities will maximize your car’s value rather than diminish it, as a dealer typically keeps 60-70% of its value. By donating your car, you’re not just getting a write-off, but you’re supporting the cause of your favorite charity.
If you’ve never participated in the car donation process, you may have numerous questions. Some of the most common roadblocks for donors include:
- Is it a scam?
- What is the best car donation company?
- Which charities can I donate to?
- Is the process difficult?
All of these issues require the help of a car donation company with experience and a great track record in the industry.
The Easiest Car Donation Process
When you find out your taxable income rate needs some help, most of us look for the easiest options to find deductions. Collecting receipts or keeping a log of miles can seem a little bit labor-intensive, or even just involve too much time to keep track all year.
The beauty of a car donation tax deduction is the fact there are companies such as Cars2Charities which, literally, do all the work for you.
When your car is spending too much time in the shop, it’s a good sign you may have a new car purchase in your future. As wear and tear increases, you start to lose money on repairs and lost wages because of time spent at the auto shop. If you typically plan to just run your car into the ground – keep it until the bitter end – it may surprise you to know that it’s not necessarily the best financial move for you.
If this is your situation, you can turn to us for the world’s easiest car donation process. All you need to do is give us a call at (855) 520-2100 or donate online. Our live car donation experts will arrange a time and date, that’s convenient for you, to pick up the car. Don’t worry, we’re flexible and we work with you.
Once the pickup is scheduled you receive a temporary tax receipt and that can be used to claim up to $500. For vehicles of lesser value, the IRS requires a basic description of the car, plus the receipt, in addition to one of the following:
- A statement in writing that you did not trade goods or services in exchange for the car donation
- An estimated value of the goods and services given in exchange for the car donation
- A statement saying that goods/services were of a religious/intangible nature
Maximizing Your Car Donation
When your car is worth more than $500, there’s a little bit more to it, but we gladly handle it for you. We sell your vehicle for as much as possible, because car donations for tax receipts are based on the selling price of the vehicle.
The Turbo Tax website confirms the value of a car donation tax deduction.
“Donating your car to charity can result in significant tax savings if you include it in your charitable contribution deduction,” it says. “If you use TurboTax to prepare your taxes, we’ll help you determine which filing status will get you the biggest tax savings.”
After it sells, we mail you an official 1098c form which indicates the sale price as your tax-deductible total. The IRS requires that the forms are submitted within 30 days of the sale, and when you donate a car to charity through Cars2Charities, we guarantee that you receive them within the limited time.
You need to itemize your federal income taxes in order to claim a vehicle donation. Even if the car donation is your only deduction, you need to employ that itemization feature on your tax return.
In one example it supposes that your tax bracket is 28 percent and the allowable deduction for your car donation is $1,000. That means you save $280 in taxes. And in another example, if you're in the 15 percent tax bracket and you get a $1,000 deduction, it will reduce your taxes by $150.
Keep in mind, you can donate as much money as you want to charities, but the IRS limits how much you can claim on your tax return.
Who Benefits When You Get a Car Donation Tax Deduction?
One of the most rewarding aspects of donating a car for a tax deduction is the fact that you truly help people. Your resources can become comfort for the sick, provide loving homes for animals, or grant scholarship money for education – whatever cause is most important to you.
The importance of the altruism in your heart is not minimized by the fact that you gain a tax credit for donating a car. You still support the work of a nonprofit, either way.
Our “Causes” tab lists the numerous nonprofit groups we work with. The beauty is that you can send proceeds from your tax-deductible car donation to any 501(c)(3) you choose. We’re happy to form new partnerships to support your favorite charity.
It goes without saying that a solid look at your tax situation before tax time is never a bad idea. There are routes you can take to improve your bottom line, and deductions are among those tried-and-true methods. A car donation tax deduction is an easy way to double down on the value of something you own for the benefit of you and others.