Car Donation Benefit?

Question

If I donate my car and get a $1,000 tax receipt, what benefit will I get on my tax return?
More of a refund? If so, by how much?

Answer 1

If you take the standard deduction (i.e., you do not itemize) then you get no tax benefit. It you itemize, and your total itemized deductions exceed the standard deduction amount, then your taxable income will decrease by $1000. Depending on your marginal tax rate, your taxes will decrease by $100, $150, $250, $280, $330, or $350.

Answer 2

First of all, you must itemize deductions. Generally speaking, unless you own a house and are paying on a mortgage, you won't have enough deductions to itemize.

Assuming you do itemize, how much tax benefit you get depends on your tax bracket. On the low end, a $1000 deduction may only net you $150 in taxes. It can go up to over $300 if you are a higher income individual.

Lastly, the rules changed a couple of years ago in regards to car donations. Regardless of what you believe the car is worth, you can only deduct what the charity sells the car for. The old rules apply if the charity is using the car.

Answer 3

Depends on a lot of things. If you already itemize, then you'd get this as an itemized deduction and your tax savings would be that amount times your tax bracket. For example if you are in a 15% bracket, you'd save $150 in taxes - if you already had a refund coming, it would be increased by $150.

If you aren't already itemizing and this $1000 doesn't make your itemized deductions add up to over what your standard deduction would be, then you get no benefit from it.

If you wouldn't have enough without it to itemize, but the donation takes you over the limit, you'd benefit from whatever part of your total itemized deductions is over the standard, times your tax bracket. Again if you're in the 15% bracket, your benefit would be something under $150.

Answer 4

It means that you can reduce you taxable income by $1,000. The percentace of that money that WOULD have been taken out for taxes is not counted toward the taxes you owe.

Let's say that you would be paying about 20% of your income as income tax. If you did not donate that $1,000, you would have to pay $200 in taxes on it. But, since you made a tax deductible donation of that $1,000, you don't have to claim it as income, so you save the $200.

So, you would either get a larger refund, or owe less taxes.