Should A Car Dealer Include Sales Tax In Finance Amounts Save Money on Your Taxes and Make Room In the Garage at the Same Tme

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Save Money on Your Taxes and Make Room In the Garage at the Same Tme

If you’re considering donating your car to charity and the tax deduction is important, there are some important things you should do first. Check out the charity and make sure they are legitimate. Check your vehicle’s value through an appraisal or by using an online tool like Kelly Blue Book, kbb.com or Edmunds.com. Understand your responsibilities as a donor, IRS Publication 4303 provides guidelines.

A common misconception is that everyone who donates a car to charity gets a tax benefit, and the reality is often different. You can only take charitable deductions if you itemize your deductions using Schedule A. So if you plan to file a 1040 EZ there is no tax benefit to donating a car.

There are limits to what you can deduct if you’re itemizing and donating. The charitable contribution deduction cannot exceed 50% of your adjusted gross income. Gross income is total income including interest and dividends less fixed items such as IRA contributions and student loan interest. When you or your accountant completes your return it will be counted as part of the process.

Find out how much you can deduct down the bill if an eligible vehicle is being donated. The IRS defines a qualified vehicle as; “Any motor vehicle manufactured primarily for use on public roads, streets, and highways; a boat; or an airplane. However, a vehicle you hold for sale to customers, such as a vehicle dealer’s inventory, is not a qualified vehicle.”

As a rule the amount you can deduct depends on what the charity does with the donated vehicle. This is usually listed in the document provided by the charity when you make your contribution. Typically, charities sell your vehicle, meaning your donation is not what you believe your vehicle is worth, but what the charity ultimately sells it for.

However there are exceptions to the rule (gross income limit). If the charity plans to use the vehicle before selling it or in exchange, they plan to make improvements to the vehicle before selling it, for example a new paint job and tires, or they plan to donate it or sell it to the charity below market value. purpose Each of these exceptions requires documentation before donating your vehicle, so be sure to check the IRS regs. Before signing anything.

Choosing the right charity for your donation is the final step to ensuring you get the deduction. Not all charities are created equal and not all organizations that call themselves charities are. The most common type of “qualified organization” is a 501(c)(3), for example a religious or educational group. The IRS website has a page that allows you to research your potential beneficiary at IRS.gov.

Not all eligible organizations may be listed here, churches, synagogues, temples and mosques are not required to apply for IRS recognition of the exemption and are often not listed. If your charity or religious organization is not listed, you can contact IRS Customer Account Services at 877-829-5500. Make sure you have the correct name and address of the charity when calling.

Finally, always keep accurate records for all of your donations, including signed, stamped, dated donation receipts that are complete, with your written assessment from a qualified appraiser if your deduction is more than $5,000. If your contribution is between $500 and $5,000 you must complete Section A of IRS Form 8283 and attach it to your return.

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