Okay, like I'm going to donate my car to a charity because I just want to get rid of it fast and people are taking forever to make up their mind to buy it. Now, they say I can get a 'tax deductible'...what does that mean?
2007-09-06 06:41:06 · 1 answers · asked by TriNStylZ 5 in Business & Finance ➔ Taxes ➔ United States
Tax deductible means that you can use it to lower your taxable income. Many tax deductions have qualifiers built in. Donating to charity is one of them.
If you use the short form (1040A or 1040EZ), then you're using the standard deductions and the charity contribution won't help you much. But if you itemize your deductions using the Schedule A, then the car contribution will help you lower your taxable income more (thereby an even lower tax).
Make sure that you get a receipt from the charity. If they start using the car themselves, then your deduction will be based on the value of the car. If the charity will use the car for an auction, then they'll let you know how much the car was sold for and that'll be your deduction.
Good luck.
2007-09-06 07:05:49 · answer #1 · answered by Omar B 2 · 3⤊ 0⤋
Tax Deductible Meaning
2016-10-19 06:21:23 · answer #2 · answered by ? 4 · 0⤊ 0⤋
The above answers tell you what tax deductible means, but you can deduct contributions to a charity only if you itemize deductions on Schedule A of Form 1040. Plus, special rules apply when it comes to the donation of a vehicle.
Generally, the amount you may deduct for a vehicle contribution depends upon what the charity does with the vehicle. Charities typically sell donated vehicles. If the vehicle is sold by the charitable organization, the deduction claimed by the donor usually may not exceed the gross proceeds from the sale.
If your deduction is $250 or more you must obtain written acknowledgement of the donation from the charity. If your deduction is more than $500, this written acknowledgment or Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, must be attached to your return. Among other things, the acknowledgment generally must include the gross proceeds of the sale, the vehicle identification number, and a statement certifying the vehicle was sold in an arm's length transaction between unrelated parties.
In addition, for deductions greater than $500, Form 8283, Noncash Charitable Contributions, must be attached to the return.
So before you donate the car make sure you can itemized your deductions or else the donation is not tax deductible.
2007-09-06 07:25:19 · answer #3 · answered by tscgmc 2 · 4⤊ 0⤋
If you donate it to a recognized charity, they'll give you a form that says how much they sold it for. If you itemize, you can include that as a deduction on your tax return - if you take the standard deduction, you can't.
If you are in a 15% bracket and they get $4000 for the car, then if you itemize the donation could save you as much as $600 in taxes.
2007-09-06 06:48:09 · answer #4 · answered by Judy 7 · 3⤊ 0⤋
This Site Might Help You.
RE:
What does tax deductible mean?
Okay, like I'm going to donate my car to a charity because I just want to get rid of it fast and people are taking forever to make up their mind to buy it. Now, they say I can get a 'tax deductible'...what does that mean?
2015-08-18 06:22:39 · answer #5 · answered by Anonymous · 0⤊ 0⤋