If you are interested in making a car donation, NY charities are grateful for your donation and you can claim some significant tax benefits. The Internal Revenue Service (IRS) has recently made some changes to the tax laws concerning vehicle donations in an effort to simply the procedure for taxpayers. In order to claim the tax deduction for your donation, you must itemize your deductions on Schedule A of your annual 1040.
The first thing that you want to do is make sure that the charity to which you are donating the vehicle is a qualified organization for deduction purposes. Qualified organizations include charitable, educational or religious organizations that comply with section 501(c)(3) of the federal tax code. They are also known as 501(c)(3) organizations.
The amount of your deduction is determined by what the charity does with your vehicle. Many charities sell the vehicles that are donated to them so that they can use the proceeds to further their mission. In that case, your deduction is usually limited to the gross proceeds from that sale. It is important that you obtain a written statement from the charity with all of the pertinent information about the vehicle and the sale.
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If the charity is not selling the vehicle then you might be eligible to claim the fair market value of the vehicle. In order to claim a fair market value deduction you need a written statement from the charity indicating that they intend to make significant use of the vehicle. The statement must include the intended use, the duration of the use and certification that the vehicle will not be sold prior to the end of that period. You may also claim fair market value of the car if you get a written statement from the charity that they will make a significant repair to the vehicle or if the charity is going to give away the vehicle (or sell it at a significantly reduced price) in direct furtherance of the charity�s mission.
No matter what type of written statement you get from the charity, it is important that you get it within 30 days and that you retain it with your tax records. It does not need to be included with your tax returns. You can find detailed information about the paperwork required to claim your deduction at: http://www.irs.gov/pub/irs-pdf/p4303.pdf.
No matter where you make your car donation, NY charities and, more importantly, the people they help benefit. Many people find that the tax advantages for donating their old car is more valuable than the price they could get if they were to sell it. It is both a financially sensible way and a very helpful way to support your favorite charity.
If you have any questions about the tax implications of your donation then some charities and your accountant or tax preparer should be able to help you. It is important that you have all of your questions answered before you proceed. When you are ready to make your car donation, NY charities are ready to receive it and to put the money earned from your donation to good use while you enjoy the tax benefits and the satisfaction of doing a good deed.