If you just want to get rid of your old car, donating to charity might be the easiest way to do that. All you have to do is call a charity that accepts old cars as donations and they will take your car away. But, if you would like to maximize benefits for yourself and the charity in question, it can be a bit more challenging. This is because today, the fair market share of a vehicle can only be deducted under very specific conditions. Here are some ways to gauge whether it makes financial sense to donate a car to charity.
Your returns must be itemized
You need to itemize deductions if you would like to reduce your federal income taxes by claiming fair market value for your car donation. A donation is a deduction from your income for tax purposes. That is why the tax benefit relates to your tax bracket. If you have many deductions and if their total sum goes beyond your standard deduction, only then will donating a car net you tax benefit. An alternative to making a car donation is calling a local company who buys Junk Cars For Cash NJ.
The charity should be a legible one that qualifies
To get tax benefits, you need to donate your car to a “qualified” charity that has been approved by the IRS as an “exempt-status” or 501(c)(3) organization. This will be clearly stated in the receipts or advertising or most charities. Religious organizations are special cases here as they count as qualified organizations, but aren’t required to file for 501(c)(3) status.
It is important to have paperwork in order
There is a lot of documentation required if you want to get tax benefits for a car that you have donated to a charity. It doesn’t matter if the car has been sold at an auction, junked or given to a client of the charity. All the electronic files and documents should be retained in case you need them when tax time approaches. For more information visit a local Car Donation NJ Center.