Do you wish to donate a car? Then, a charity car donation has proven to be one superb way of getting a deduction on your taxes. The basic tax procedure for most Americans is as follows: a person makes a certain amount of income per year called the "gross income". The Internal Revenue Service (IRS) allows certain deductions from the total "gross income". The remaining income is called taxable income. This taxable income is then taxed, a certain percentage on the basis of the income range. The higher the taxable income, the more the tax to be paid.
The individual tax payer is allowed certain deductions to reduce their taxable income. The two major deductions are standard deduction and itemized deductions. With Standard deductions, the IRS provides each tax payer with a predetermined deduction for himself and dependants. Basically to qualify for a tax deduction for a car donation your total deductions would have to be greater than the standard deduction you would receive. The amount the individual can deduct for their charitable contribution can reduce the taxable income by that amount.
Here are some of the most important and best charity donation tips you'll consider before donating your vehicle whether it's a car, truck or van.
1. Asking the organization for an Internal Revenue Service's letter of determination will verify the eligibility of the charity chosen as a recipient.
2. Don't forget to get a documented receipt for vehicle or car donation from the charitable organization.
3. Clearly document the exact car or vehicle value. Always maintain the records. This ensures that no eyebrows are raised in concern to your income tax returns since IRS scrutinizes carefully all non-cash donations.
4. Ensure that you know the exact value of the car and have documents stating its value to avoid any suspicions regarding your income tax returns as there will be a lot of scrutiny from the IRS when it comes to non-cash donations.
5. Have pictures of the inside and outside of the car that you are donating.
6. If the car has received any upgrades like installation of new tires, make sure that you keep the receipts for documentation and verification of the car value. The charity that receives the car will not be responsible for paying any fines if the IRS conducts a review and finds that the figures you gave are unsubstantiated.
A tax deduction checklist should be followed strictly before any tax deduction is done. This is done to make sure that you are tax- aware throughout the year. The checklist acts as a guideline to help you make all the necessary provisions before deducting.
The individual tax payer is allowed certain deductions to reduce their taxable income. The two major deductions are standard deduction and itemized deductions. With Standard deductions, the IRS provides each tax payer with a predetermined deduction for himself and dependants. Basically to qualify for a tax deduction for a car donation your total deductions would have to be greater than the standard deduction you would receive. The amount the individual can deduct for their charitable contribution can reduce the taxable income by that amount.
Here are some of the most important and best charity donation tips you'll consider before donating your vehicle whether it's a car, truck or van.
1. Asking the organization for an Internal Revenue Service's letter of determination will verify the eligibility of the charity chosen as a recipient.
2. Don't forget to get a documented receipt for vehicle or car donation from the charitable organization.
3. Clearly document the exact car or vehicle value. Always maintain the records. This ensures that no eyebrows are raised in concern to your income tax returns since IRS scrutinizes carefully all non-cash donations.
4. Ensure that you know the exact value of the car and have documents stating its value to avoid any suspicions regarding your income tax returns as there will be a lot of scrutiny from the IRS when it comes to non-cash donations.
5. Have pictures of the inside and outside of the car that you are donating.
6. If the car has received any upgrades like installation of new tires, make sure that you keep the receipts for documentation and verification of the car value. The charity that receives the car will not be responsible for paying any fines if the IRS conducts a review and finds that the figures you gave are unsubstantiated.
A tax deduction checklist should be followed strictly before any tax deduction is done. This is done to make sure that you are tax- aware throughout the year. The checklist acts as a guideline to help you make all the necessary provisions before deducting.
About the Author:
Mark Peter, a skilled tax professional, has come up with a website located at: http://www.Irs-Deductions.org, which is very useful as a tool to help you reduce your tax liabilities. For instance, did you know that a car donation tax deduction can be claimed if the car is donated to any eligible organization?
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