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If you are looking for a way to get ride of an old vehicle,
you may want to consider a car donation. To donate a car, you simply have to
contact a car donation services and they take care of everything else. Thus,
donating your car to charity rather than selling it is more convenient and
fast. Moreover, you help those who are in need of assistance when you donate
your car and benefit from it through tax benefits in return. The IRS allows a
deduction to your taxes payable equivalent to the proceeds from your car
donation.
Before you donate your car to charity you will probably want
to know how much will your tax deduction be. The amount of your car donation
tax deduction is covered by the 2005 revised federal tax legislation on car
donations. This legislation describes two possible amounts for your car
donation tax deduction- the gross sales amount and the fair market value of
your car.
Car donation services usually either refurbish donated cars
first or sell them as is at auctions where the true fair market values of the
cars are considered. So if the cars were donated to them at a bloated fair
market value, the amount that the car was sold for did not match this bloated
value The 2005 car donation tax legislation revision corrects this error by
allowing only the gross sales amount of the donated cars as the donor's tax
deduction.
Car donation services do not always sell donated cars. They
may either use the car for their charitable causes or assign the car to a needy
family or individual. If the donated car is used this way by the car donation
services, the revised car donation tax legislation allows that the fair market
value of the car is used as the donor's tax deduction.
The legislation however, still allows that the fair market
value of the donated car be used as the donor's tax deduction provided that
they meet certain conditions and paperwork. The fair market value of a car
donation is the amount used for the donor's tax deduction. However, the IRS
found out that donors were claiming fair market values of donated cars based on
the make and the model without considering the car's condition. Since the fair
market value is the amount agreed upon by the donor and the car donation
services, the donors usually considered the book value of the car as the fair
market value without taking account of depreciation and the needed
refurbishing.
The necessary paperwork that the IRS needs for the fair
market value tax deduction is an acknowledgment receipt issued by the car
donation services. This paper must state that the car is used directly for
their charitable causes, the donor's tax identification number or social
security number and the car's identification number. Moreover, the IRS may also
require that the document contain a phrase restricting the donated car to
charitable uses only and not to any future sale.
Donating a car and reducing your taxes is very convenient
and easy. There are already numerous car donation services online. All you have
to do is: call their toll-free number, fill out the application form, and wait
for your car to be picked up but before that, you may want to check for a
501(c) (3) charity organization classification. This way you can be sure that
your donation goes to charity and be assured that your car donation tax
deduction is valid.
For More Information Car Donation New Jersey [http://www.donate-car-nj-new-jersey.org/] and Car Donation in New York [http://www.donate-car-ny-new-york.org/]
Article Source: http://EzineArticles.com/1338899 By George V King
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