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vehicle donation law | car donations tax

Looking to cut your 2011 or 2012 Federal taxes by donating to charity? Follow these 8 Important Steps, whether you’re thinking about the vehicle donation law or making a cash donation.

Want to lower your tax bill? Try making a charitable contribution. Whether you donate services, stock or make car donations, tax law still allows you to deduct charitable contributions if you make them to a qualified organization and itemize your deductions. The following 8 tips are an effective roadmap for lowering your taxes by making charitable contributions.

1: Make sure you see the 501 (c)(3).

If you don't want the IRS to disallow your deduction, make sure you follow tax law and vehicle donation law by making your contribution to a qualified charity. The safest bet is to make your donation to a 501(c)(3) organization. It has to be a charitable organization - you can't deduct contributions to individuals, political organizations or people running for office. If you want more information about finding the right organization to give a tax-deductible contribution to, go to the IRS website and download Publication 526.

2: Whether you’re writing a check or making car donations, tax law requires you to itemize.

You can't get a charitable tax deduction if you don’t itemize. You have to file Form 1040 (the long form) and itemize your deductions on Schedule A.

3: Make sure you subtract what you get from what you give.

If the charity you donate to gives you anything in return for your donation, like the free vacation vouchers offered by some charity car donation programs, according to vehicle donation law you need to subtract its worth from the amount of your contribution. Whatever you have left over is the only amount you are allowed to deduct from your taxes. This goes for any goods or services you receive when you donate to a charity, whether you get tickets, gift cards, vacation vouchers or merchandise. Subtract what you got from what you gave and you'll be fine.

4: Specific types of donations have specific types of deductions.

You can usually value stock or other non-cash property at fair market value. Used household items or clothes usually have to be in pretty good condition if you want to deduct their value. That also applies to car donations tax law. If you're donating a used vehicle like a car or truck to charity, reputable charities like Volunteers of America will provide you with the proper paperwork for your tax deduction.

5: Fair market value makes for a fair tax deduction.

The term fair market value is used for the dollar figure that someone who wants to buy a vehicle, an item or some property would pay the seller, as long as neither of them has any pressure to buy or sell and all of the facts about the vehicle, property or item are known.

6: If you don't have a record, the IRS won't play.

If the contribution you want to write off is cash, a check or another kind of monetary gift, the IRS requires you to have to have an acceptable record of it. Acceptable records include payroll deduction records, bank records or a written receipt from the charity that includes the name of the charity, the date of your contribution and the amount you donated. If you make a donation to a charity via a text message, you can use your phone bill as proof - if your phone bill shows the name of the charity you contributed to, along with the date and amount of your donation.

7: Records - The 'B' Side.

If you contribute property or cash that is worth $250 or more to a charity, you need the records outlined above. You will need to show payroll deduction slips, a bank statement or record or a receipt showing the amount of your monetary contribution, or a description of the property you donated. This also applies under current vehicle donation law. The record or receipt will also need to reveal whether the charity gave you goods or services when you made your donation. In many cases the same documentation can feature written description of monetary gifts in addition to the required acknowledgement for gifts worth $250 or more. If your total non-cash contribution is over $500 for the year you must fill out IRS Form 8283 and include it with your return.

8. A final note for those with extreme generosity.

If you contribute property or items with a value of $5000 or higher you will need to complete Section B of Form 8283. Completing Section B usually means you have to get a professional appraisal.

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