Did you know that if you donate a car to a registered charity, you can claim this as a tax deduction. You can also time when you donate a car to reduce your taxable income. This should always be done with caution however, or you may not get any benefit from donating your car to charity
How to Lower Your Taxes - Donate a Car
Don't just take what the IRS gives you. When you donate a car to a registered charity, you can claim this as a tax deduction. You can also time when you donate a car to reduce your taxable income. This will put you into a lower taxation bracket.
When to donate a car deliberately to reduce your tax is best done with advice from your accountant. If you think you may come close, you'll need to do some arithmetic to work out where are in relation to the next lower bracket. This is especially true if you have making quarterly payments, as most small business owners do. It may only take a couple of thousand dollars to put you onto the lower rate. Even a car that doesn't run that well can be donated to a recognized charity.
In this case you need to decide whether you are going to donate a car in good running order, or a less reliable one. To claim the maximum deduction, it's better for you to donate a currently working and licensed car.
Some recommend actually selling the car first, then donating the sale proceeds directly to the charity. You're able to claim this amount as a tax deduction. However, most times it's far more easy to just donate a car that is running. This is especially true when the charitable organization does the paperwork on your behalf.
If, of course you sell it by yourself, you will have a lot more control when you donate a car than if you simply let it go to a charity or one of their representatives. If this happens, especially in the case of low value or non-reliable vehicles, the representative of charitys simply selling cars in the wholesale market the vehicle to close the sale and get the money quickly and keep costs down.
Cars that are disposed of on this wholesale market, are more than likely to receive a portion of the cars estimated market value. This may not give you enough of a tax deduction, to make the exercise worthwhile. You will also be without a car, so do your homework before you donate a car to charity.
Daniel Gulberry is a self-confessed car fanatic. He has his own blog devoted to the best hybrid cars. He has also set up a site devoted to those who want to donate a car. Visit them today.
credit Link
http://danielgulberry.com/
http://cars-donate.com/
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