Home > Taxes: Donate Car > 8 Step Guide to Charity Donations
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 tax code or making a cash donation.
Would you like to pay Uncle Sam less while helping out a worthy cause? Then make a donation to a charity before the end of the year. The US Tax code changes every year, but the Internal Revenue Service still lets you deduct donations to charity from the tax you owe...as long as your donation goes to a qualified charity, and you itemize your deductions. The following 8 tips are critical whether you want to write off car donation, services donation or simply write a check.
1: Make Your Donation by the Numbers... 501(c)(3).
Nobody wants the IRS to disallow a deduction. If you want to avoid having the Internal Revenue Service throw your deduction out, follow the vehicle donation tax code and be sure you contribute to a qualified charity. Want a sure bet? Make your donation to a 501(c)(3) organization. If you want to deduct it, donate to a charitable organization - you can't deduct donations to individual people, political parties or organizations or anyone running for office. If you want more information about organizations you can give a tax deductible contribution to, go to the Internal Revenue Service website and download Publication 526.
2: If you don't itemize, you can’t get a write off – car donation, cash donation or anything in between.
That's the beginning and end of it. If you want a tax write off you have to file Form 1040 and itemize your deductions on Schedule A.
3: If you get anything in return, you better put it on your return.
According to vehicle donation tax law, and other tax law, if the charity you contribute to gives you anything in return for your contribution, like the free vacation vouchers some charity car donation organizations offer, you need to subtract its value from the amount you donated. The amount left over is the amount you can deduct. This goes for any goods or services you get in exchange for your donation - tickets, vacation vouchers, gift cards or any merchandise. Do the math, it's not worth the risk.
4: Specific types of donations have specific types of deductions.
You have to use a specific type of deductions for a specific write off, car donation, donated property or donated cash and services. 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. 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: Get to know the fair market value.
Most of the time fair market value is the amount that someone who wants to buy property, a vehicle or an item would pay someone who is selling it, when both of them have no pressure to buy or sell and all of the facts of the property, item or vehicle 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: Tax 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 to be compliant with tax law, including vehicle donation tax law. 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. 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 the ultra-generous.
If you donate property or items worth $5000 or more you need to complete Section B of Form 8283. To do that you usually need to get an appraisal.
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You get the maximum tax deduction and help Volunteers of America in Nevada fund locally based programs that aid thousands of people in The Silver State. 100% of the money raised from car, truck and boat donations stays here in Nevada, funding community programs that bring hope to kids, homeless vets and neglected seniors.
To make a write off car donation to Volunteers of America in Nevada, just use the form on the right side of this page. Or call us toll free at 877-721-4862.
No matter where you live in Nevada, from Las Vegas to Reno, Carson City, Paradise, Henderson or Elko, your donated vehicle helps us fund programs that change the lives of thousands of people in Nevada every year.