Donate Used & Junk Cars to Charity for a Tax Write Off
The Internal Revenue Service wants to remind taxpayers to obtain the correct forms after donating a used vehicle to charity. You must remember to get a written acknowledgment stating the fact that you donated your car. If you donʼt have a receipt from the charity for the fair market value of the vehicle then, you cannot deduct it from your taxes. For deductions of more than $500, you are required to attach the receipt to your tax return for the year of the donation.
Deduction is Limited to Gross Profits
As of January 1, 2005, a taxpayerʼs deduction is limited to the gross proceeds from the sale of the vehicle by the charity. The charity has to give you a receipt or written form of the sale within 30 days of the sale of the vehicle. If the charity spends any money on repairs or upgrades, that amount is deducted before the gross profit is calculated.
When to Claim Deduction
Some may be wondering when to claim the deduction. Do you claim it when you donate it or do you claim it after it is sold? The charity does not need to sell the vehicle in the same year that it was donated. A taxpayer can take a charitable contribution deduction only for the year the vehicle was donated to the charity. What if the charity doesnʼt sell it in the same year? You do not have to worry about that at all. You take the deduction for the year you gave the donation.
Checklist for Donating Used Vehicles to Charity
Make sure you obtain written acknowledgment from charity
You can deduct the gross profit from the sale
Deduct donation for the year the vehicle was donated
Taxpayers who itemize their deductions can take a charitable contribution deduction
Attach the written receipt to your tax return
To learn more about donating junk cars to charity for a tax write off, please visit Turbo Tax Online for more help. Turbo Tax Online will help you meet all of the IRS requirements for your charitable deduction of your used vehicle.
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