Do you have a junk vehicle you’d like to unload? Have you considered how donating the car helps with tax? You might be surprised at the difference a junk car can make on your taxes.
Before the tax deadline hits this spring, you should consider reasons to sell your car during tax season. Every dollar deducted helps, right?
Here’s what you need to know to make the most of your junk car on your taxes.
How donating the car helps with tax
When you donate a vehicle, it is considered a charitable contribution. Charitable contributions are tax deductible, so your donation could lower your taxable income, helping you save when it comes time to pay your taxes.
If you want to go this route, you need to determine what car value to use for your deduction. This depends on how the charity uses the vehicle. If they keep the car and use it for their charity, you can deduct the fair market value of your car. If the charity sells your car, you must use the sale price for your deduction. The charity should be able to provide this information for your tax purposes. You can request documentation that shows the sale price, so you have a record of it for the IRS.
How to claim your deduction
If you want to claim your deduction, you must file your taxes appropriately. You can only claim the deduction if you itemize your taxes. You will use a Schedule A and report the charitable donation on line 17. You may also be required to complete additional forms.
If the donation value is more than $500, complete a Form 8283. How this form is completed depends on the value of the vehicle. If the deduction is more than $5,000, you will need an appraisal of the vehicle as well.
If you are donating a junk car, it’s likely a charity would sell it for less than $500. In this case, you will be allowed to deduct $500 or the fair market value, whichever is lower.
Questions about how donating the car helps with tax?
If you are considering reasons to sell your car during tax season, there are two experts you should consult. For specific assistance with your tax deductions, contact a tax professional. For additional information on how donating the car helps with tax or other options for your junk car, contact your local junk car buyers.
Local junk car buyers are experienced with these transactions. They may also be able to connect you with charities who accept junk cars and work with you to help you get the deductions you want on your taxes.
We know junk cars
Fully-licensed and -insured, Express Cash for Junk Cars Charlotte is your go-to source for selling or donating junk cars. Whether you are looking for quick cash, tax benefits, towing services or cash-for-cars services, we are ready to assist you. Contact us today at 704-953-5867 with any questions or to make arrangements for your junk car.