How do tax deductions work when donating a car?

Question

Well, I have found that my non-running car is not worth fixing. I would like to donate it but how does that work? My father has to pay taxes and has been pressing me to sign the car over to him so he can get the deduction. I do not have to pay taxes at the end of the year so would it even benefit me if I donate it?

Answer 1

Give it to yo' daddy and quit bein' a stingy ho ho ho.

Answer 2

Hi, I am not sure if it's worth it to sign the car over to your dad, the tax reduction might not worth the trouble. Anyway, to donate your car is always worth it, even if you not get any tax deduction for it.

Sharing makes happy:)

TARSHA

Answer 3

Your father will benefit by taking a deduction for donating the car. If the car is worth $250 or less you do not need to get the proof of the sale from the charity, just keep the transfer documents and deduct the value up to $250.

If the car is worth $250 up to $499, you do need to get a receipt from the charity, but you can still take the deduction.

Only when your car is worth $500 or more must you wait for the 1098C from the charity and take that deduction indicated on the form (the price they got for the car).

Most of the time the charity will just give you a receipt and you can take a deduction for the value of the car up to $500 without a problem.

Your father may be remembering when you could deduct the Blue Book value of the donated car, but the IRS stopped that a couple of years ago.

Answer 4

For most charitable donations of property you can take the fair market value of the property or the amount you paid for it which ever is lower, if you can itemize deductions. Starting with tax year 2005 the rules for motorized vehicles (cars, boats, motorcycles, airplanes) changed because of just the situation you are describing.

In prior years if you donated a car, most people would appraise its value using something like the NADA or Blue book, even if the car didn’t work they would still take the book value for the deduction and not it’s true value. Since most charities sell the property that is donated to them whether it be houses, stocks and bonds, or cars, congress changed the law so the donation reflects more if its true value. For car donations of $500 or more you can take the gross proceeds of the sale or its fair market value whichever is smaller (pub 526 p 8). The charity will give you form 1098 C within 30 days of the sale of the vehicle; you must include the 1098 C with your tax return. There are exceptions if the vehicle is sold to a needy individual or used by the charity instead of sold.
http://www.irs.gov/pub/irs-pdf/p526.pdf

Answer 5

If you aren't already paying taxes, then no, donating the car wouldn't benefit you. If your dad itemizes, it might benefit him, although not a large amount. If he pays taxes but takes the standard deduction and doesn't itemize, then it won't benefit him either.

If he donates a car to an eligible organization, the organization will give him a receipt for what they sell it for, then he can show that as an itemized deduction - his tax benefit would be at most that amount times his tax bracket.

Since it isn't running and isn't worth fixing, the organization probably would sell it for $100 or $200 at most. I don't know what your dad's tax bracket is, but if he's in a 15% bracket and they sold it for $200, he'd save $30 in taxes.

Answer 6

a million. The deduction is what the charity sells the motor vehicle for, so which you will no longer be attentive to till once you donate it and that they deliver you place of work work on what they have been given for it. it particularly is often below blue e book value. 2. To take a deduction you will be able to desire to have the motor vehicle titled to you, yet there's no minimum time. 3. unsure merely what you have in techniques right here, yet no there's no particular shrink. yet your tax low value costs would be at maximum the deduction volume situations your tax bracket % - and you will be able to desire to itemize to get ANY tax income. So in case you donate a vehicle with straightforward marketplace value $4000, they might sell it for $3000, and in case you're in a fifteen% bracket, your tax low value costs is at maximum $450. So it particularly isn't any longer some thing you ought to do as a funds-maker.