Giving Your Car to Charity - The New Tax Rules
The IRS has changed the regulations on donating vehicles to charities. If you donated a car last year, you need to read the following to understand the new rules.
Giving Your Car to Charity – The New Tax Rules
Millions of people donate cars, boats, RVs, motorcycles and many other forms of transportation to charities each year. While doing a good thing is one motivation, reaping a sizeable tax deduction is also a motivating factor. Unfortunately, the IRS has concluded that more than a few people were deduction very optimistic values for their cars. Instead of auditing everyone, the IRS simply changed the deduction rules for vehicle contributions to charity.
If you donated a vehicle of any sort to a qualified charity, but claimed less than $500 as a deduction, you can stop reading. The rule changes don’t apply to such situations. If you are claiming a deduction in excess of this amount, read on.
The new IRS regulations are pretty simple to understand. If you donated a vehicle to a qualified charitable organization, the amount you can deduct is the exact dollar value the charity receives when it resells the vehicle. Put another way, you can no longer claim the blue book value of the car. The IRS wants to know what it was really worth, not what it would be worth if you hypothetically repainted it, got new tires, rebuilt the engine and so on.
Charitable organizations are more than aware of the new regulations and they will more or less take care of everything for you. To donate a car, you simply arrange for delivery to the charity. The charity will then resell the car at some point in time. The organization will then will send you correspondence detailing the gross proceeds from the sale of the vehicle.
This correspondence should, but is not required to, come to you as Form 1098-C. Yes, another form. Simply take the deduction for the gross proceeds on Schedule A and attach the Form 1098-C to your tax return. If the charity sends you a written letter, attach that to your tax return.
While the above may sound overly burdensome, it really isn’t.
Richard A. Chapo is with BusinessTaxRecovery.com - providing information on tax and taxes. Visit us to read more tax articles and our new tax credits page.
Source: www.ezinearticles.com
