Hi There, We are looking to donate an used car, we would like to know, how can we get the most value for our car? And also, if let's say I am supposed to pay $3k in taxes and the value of the car donated is $6k, will the other $3k be used towards paying taxes next year?
2006-12-20 06:55:02 · 6 answers · asked by Suntoosoon 2 in Business & Finance ➔ Taxes ➔ Other - Taxes
Charitable contributions are deductions, therefore they do not reduce your tax liability dollar for dollar (that would be a tax credit). Instead, they will reduce your tax liability based on your marginal tax rate. If the value of your car donation is $6,000 and your marginal tax bracket is 30%, your tax will be reduced by $1,800.
As for donating property and not cash, only the appraised value of the property being donated is deductible. The appraised value for most property can be determined by simply using the fair value (i.e. thrift store value, or Kelly Blue Book for automobiles, or stock price on the date of donation for stock). For certain donated property such as art, or real estate, an independent third party appraisal is required.
2006-12-20 07:02:41 · answer #1 · answered by jseah114 6 · 0⤊ 1⤋
I received all information from the charity that I used for my donation but if your charity does not offer such information I recommend to visit http://TaxPurposes.cardonatehelper.org
Have fun with your research and even more with the results of your donation - sharing just make more happy than anything else :)
Take care!
Tarsha
It's Official: Sharing Makes Us Happier!
2014-04-29 18:00:56 · answer #2 · answered by ? 2 · 0⤊ 0⤋
Wayne Z is correct. The amount you can deduct won't be appraised value or blue book, but will be whatever the charity sells it for. This rule change is for donations after 2004. This rule applies to donations of cars, boats or airplanes.
The rules are a bit different if the organization sells the car for less than $500, or uses the car instead of selling it.
In any case, you'd get a deduction (only if you itemize), which means the allowable amount would be subtracted from your taxable income along with your other itemized deductions, not subtracted from your taxes. If your deductions and exemptions exceed your income for the year, then you owe no tax and would get back anything withheld, but couldn't carry the excess over to the next year.
2006-12-20 17:48:59 · answer #3 · answered by Judy 7 · 0⤊ 0⤋
That is not how it works.
1) Charitable contributions are a deduction and not a credit. For example, a $6000 deduction saves you $1500 in taxes if you are in the 25% bracket.
2) The changed the rules on car donations a while back. The charity is supposed to let you know what they sell the car for. That is the amount you can deduct. Your $6000 car will net the charity much less at auction.
2006-12-20 15:00:31 · answer #4 · answered by Wayne Z 7 · 3⤊ 0⤋
First of all, giving the car to charity may produce a deduction, but it will not produce a credit. This may sound like a fine point, but it is very important and it seems that you are confused on this issue.
If the car is worth $6k you might be able to deduct $6k from your gross income. If you are in the 28% tax bracket the result is that you may be able to reduce your federal income tax liability by as much as $1,680 ($6,000 X .28 = 1,680).
My suggestion is that you forget about giving the car to charity and simply sell it "as is" to a private buyer. You'll be much better off financially if you just sell it yourself.
2006-12-20 15:05:11 · answer #5 · answered by steven 3 · 0⤊ 0⤋
Someone benefits from the donation if it is to be tax effective. Why not "everyone"? If no one beneffits, it is fraudulent and you do not deserve an answer.
2006-12-20 15:02:40 · answer #6 · answered by Tom Cat 4 · 0⤊ 2⤋