Posted by Dennis Jao

Tax Benefits of Donating a Vehicle

Tax Benefits of Donating a Vehicle

It is very easy to donate a car to charity. The National Kidney Foundation of Utah and Idaho has one of the country's oldest (since 1990) and popular car donation programs. We'll tow away your heap and help you take advantage of the tax benefits of donating a car.

Here are the basics, but you should discuss them with your accountant before donating to understand your tax benefit.

Here is some more information on the tax benefits of donating a car and what you need to do to take advantage of these benefits.

To benefit from the tax advantages of a car donation, you must choose your declaration.

If you want to request a car donation to reduce your federal income tax, you must enter your deductions against the standard deduction.

But even if you don't, don't let it stop you from giving. Charitable donations cover the gap between what the government provides for emergency financial care and what a charity can offer kidney patients who have to pay out of pocket, such as insurance deductibles, accommodation, and transport.


TAXES AND CAR DONATIONS

Taxpayers who intend to donate a car to charity may wonder how the tax law, which came into effect in December 2017, might affect them. It also changed past income levels. Starting in 2018, you could find yourself in a new category, which may result in higher or lower fees, depending on your personal situation. This means that the tax advantage of a donation can be more or less advantageous.

The latest standard deductions went from $6,350 to $12,000 for individuals, couples entering separately; $9,350 to $18,000 for the head of household; and between $12,700 and $24,000 for couples filing jointly. This change likely means that fewer people will be encouraged to donate to charity, which is a real shame for kidney patients.

"The vast majority of taxpayers will accept the standard deduction," said David L. Thompson, vice president of public policy for the National Council of Non-profit Organizations. "This means that most taxpayers have no incentive to donate to charity. This is a major concern. We plan to double the standard deduction to reduce donations from $13 [billion] to $20 billion per year. "

With these and other tax changes, it's more important than ever to donate to charity. Consult with a tax preparer to understand the benefits you receive before donating a car to charity. Suppose the most important aspect of your charitable donation is what you will receive, without respect for kidney patients whose lives depend on the services provided by your car donation. In that case, charitable donations may not help you suit. If you need to get rid of a car quickly and for free, the cost of repairing the car is more than the value of the car, and you feel good helping kidney patients in 'Utah and Idaho, then a charitable donation is a great choice.


The charity must be eligible.

The National Kidney Foundation of Utah and Idaho is a 501 (c) (3) qualified charity. To claim your tax deduction, all you need to do is donate to qualified charities. A qualified charity is one that the IRS recognizes as a 501 (c) (3) organization.

To help you determine if a charity is eligible, the easiest thing to do is call the IRS toll-free number: 877-829-5500.


Obtaining fair market value is very rare.

It is unrealistic to expect your car to meet any of the stringent fair market value requirements. Only cars that can be driven to patients with kidney failure or used by the charity for its programs can be claimed at fair market value. About two-thirds of donated cars are auctioned off, and one-third is recycled for parts. So, unless your car is in good driving condition, it will likely be sold at auction or in a landfill. At that point, your deduction will not be based on an estimate of fair market value but on the actual selling price. However, the National Kidney Foundation of Utah and Idaho has over 30 years of past and present sales figures and can provide a realistic estimate of what the car can sell. This can help you make an informed decision about the value of your donation against your tax return. However, keep in mind that there are no guarantees, only estimates. The calculation of the selling price of the car depends on the fluctuation of the prices of metal recycling and the possible investor in classic cars.


The tax receipt and a copy of the title are essential.

Documentation is the key. You must correctly sign your title with the Utah National Kidney Foundation. Suppose your car is recycled or auctioned. IRS 4303 publication contains more details. Therefore, be sure to keep copies of the title and tax receipt (preferably in an electronic file). You will need it at the time of imposition.

If there is a delay in selling your car between the end of one fiscal year and the start of another (and you know your car will sell for more than $499), you can ask the IRS for a six-month extension. ; or later change the IRS 1040 from the previous year. Another option is to apply on time, requiring only the minimum "up to $499, but not more than $499" as required by IRS rules. Finally, donors are not required to claim a deduction for a car donation. Charity patients and kidney patients continue to benefit from your generosity, regardless of your tax return.


You can sell your car at any time and donate.

Besides donating your car directly to charity, there is another way for your vehicle to help a charity and maximize your tax benefits: you can sell the car yourself and donate the profits. If you know your car's history and are a big seller, you may be able to make more money than letting the charity sell it.

Getting rid of a junker helps the Utah National Kidney Foundation donate hundreds of thousands of dollars a year to accomplish its mission; Providing healthcare and human services to kidney patients in Utah and Idaho with pocket medical bills (which are not covered by insurance or government programs). Donating a car to charity will also make room in your garage for a new car. So it's important to keep in mind that if your approach is to get rid of a junker with a minimum of fuss and you want a tax deduction as a bonus, then your car is worth giving!


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Dennis Jao
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