Car Donation Tax Deduction

Giving away your car to a charitable organization is one way you can get tax deductions from your income. 

It has become a popular way of getting tax deductions for most individuals and companies. In America, the process regarding taxation usually involves the following; an individual earns a degree of money in a year which is usually referred to as the "gross income". 

The IRS determines how much money will be deducted from your "gross income". The amount that remains is the taxable income. This is what is taxed at a percentage that they decide based on the income range. The more income that you earn, more tax that you are required to pay.

The individual taxpayer is allowed certain deductions to reduce their taxable income. The two major deductions are a standard deduction and itemized deductions. With Standard deductions, the IRS provides each taxpayer with a predetermined deduction for himself and dependants. Basically to qualify for a tax deduction for a car donation your total deductions would have to be greater than the standard deduction you would receive. 

The amount the individual can deduct for their charitable contribution can reduce the taxable income by that amount.

The practice of donating vehicles like cars to charities is not a new practice. But it was only recently with the newly enacted tax laws that the law became clear on how one can avail of a car donation tax deduction.So if you have an old car and you are planning to buy a new one, and you want to free up the garage space, you could donate it to charity and avoid all the hassle. 

Look for a charitable organization that is eligible to accept car donations so that you can avail a car donation tax deduction.

If you do so, you can gain a tax write-off, and you can help the needy at the same time by donating to charity. It is like one stone hitting two birds: you can help the charity in its work, and you can gain something for yourself.And when decided on donating a car to a charitable organization, one must make sure that the organization is eligible to accept such a donation. One can only avail of a tax deduction if one donates it properly and observes the procedures specified by the law.

A donor of car donations must ask the IRS for necessary documents to determine and validate the tax exempt status. The eligibility of the receiving charity must also be confirmed before any transaction should take place. If one donates a car to a charity that is not allowed by the authorities to receive such donations, then one will not be eligible for the tax deduction.

There is also certain paper work that needs to be accomplished before one can avail of the car donation tax deduction. There are charitable organizations that process their donor's car donations and give them tax-deductible receipts, and even help out with the whole process if the donor needs it.

A written acknowledgement from the charity is then needed to be filed together with the donor's tax returns for one to avail of the car donation tax deductions. And it is highly recommended that one keep pictures and all the necessary documents handy in case questions or problems may arise in the future.