The irs wants you to know some frequently asked questions on car donation charities
The Irs Wants You to Know Some Frequently Asked Questions on Car Donation Charities
Though many people consider the Internal Revenue Service (IRS) to be their own personal nemesis, given the ever-increasing cut of income that’s taken every year, the are some car donation charities FAQs it is to everyone’s benefit you should be aware of, as a taxpayer. To that end, the IRS has gone to great length to make their policies easily available in many different ways, some of which are generally more effective than others.
Regardless of how one gets their information about car donation, charities FAQs have been a matter of public discussion ever since the somewhat shady nature of vehicle donation was made apparent in the early ‘aughts. When the General Accounting Office (GAO) issued their groundbreaking report to the US Senate in late 2003 (as a result of public outcry and pressure from states), not even the IRS or Congressional Finance Committees seemed to know the rules and regulations regarding car donation charities.
FAQs have since been adjusted according to the new rules that made it far harder when for-profit companies tried to use legitimate charitable operations to line their own pockets. Now that many of these loopholes have been addressed, your odds of making a charitable automobile donation that you can feel good about are better than ever.
Among the most often asked car donation charities FAQs is how one goes about selecting a good, worthwhile charity. They may contact such a charity immediately, or look up an auto donation service that serves charities they support. The IRS would generally prefer you donate directly to keep potentially obfuscating the amounts actually going to the charities in question.
Of course, the IRS would also like to file the correct paperwork, since even a friendlier IRS still has a slavish devotion to filling out standardized forms. In the case of auto donations greater than $500, a donor is required to file a Form 8283, section A. This can be downloaded from the IRS website and should be signed by both the donor and the charity in question. Many charities will happily supply you with such a form – it is in your best interest to find out if this will be taken care of for you before you sit down to do your taxes at the end of the year.
Another important car donation charities FAQ is that if the donation is worth more than $5,000 (whether the vehicle is to used by the charity or sold), section B of Form 8283 must be filled out and attached to your deductions form. Additionally, you will also need to supply an independent appraisal with your return for such high-end donations. This can be arranged by the charity or yourself. The cost of such an appraisal may or may not be considered part of the donation – check with your CPA to make sure what the current regulations are given your exact circumstances.
When dealing with car donation and charities, FAQs pertaining to how you will go about itemizing your deductions govern how such a donation will actually benefit you and the charity in question. For instance, it is wise to consider the extra effort (or money in the case of paying a professional tax preparer) is involved in switching to itemized deductions. Some people are actually better served buy taking the standardized deduction. You should balance these potential expenses against the actual amount your tax burden will actually be decreased. In most tax brackets, this represents about a third of the value of your car donation. Charities and FAQs pertaining to car donation should clearly point out that deductions are from one’s net income rather than the amount of tax owed.
When considering the actual tax benefit of your car donation, charities FAQ usually do a good job of pointing out the limitations of the value you can claim as a deduction, as well as their own status as an IRS sanctioned non-profit organization. In the case of charities that have a limited or dubious mission, you could find your deduction challenged as going to a less-than-charitable organization. Do your own homework and verify the validity of any charity you choose to donate to.
And remember, all the car donation charities FAQs in the world won’t protect you if you take an active role in defrauding the federal government. Honesty is the best policy in all dealings with the IRS.