SEO
How much tax return will I get back if I donate my car to charity?
Posted by admin on Nov 4th, 2009
Waldo Waldo Waldo! asked:
Someone told me you get $500 in tax return if you donate your car to charity. I live in California so another state could be different.
Someone told me you get $500 in tax return if you donate your car to charity. I live in California so another state could be different.
I would imagine that they are other factors to consider:
Income
Tax amount taken out of paychecks
Deductions
i got 5,000 last year for my car
There’s a difference between a tax return and a tax credit. A tax credit is the amount you are allowed to deduct from your taxable income. A tax return or refund is an actual dollar amount you get back from the government. Donating your car will get you a tax credit.
My daughtetr got nothing in Illinois.
I got a tax credit of $500 which amounted to almost nothing. I pretty much gave it away for free, and I do regret it….
You can claim a charitable contribution for whatever the charity sells the car for if the value is over $500. If it is under that, you can claim the fair market value.
btw: I am also a Californian. Makes no difference.
First of all, you can only deduct a charitable contribution if you itemize, so if you don’t itemize, there’s no tax benefit to you from the donation.
Charities usually sell donated cars at auction, and they’ll give you a receipt for the car showing how much it sold for – that’s the amount you can deduct. Be aware that cars being auctioned usually sell below what would be fair market value.
The tax benefit from the deduction is at most the amount of the deduction times your tax bracket. So if they sold the car for $3000, and your tax bracket is 15%, your tax savings would at most be $450.
This is for federal taxes, so the rules are the same in every state of the US.
Charitable donations do not result in payments to you. Charitable donations only reduce your taxable income, and then only if you itemize.
If you are in the 15% tax bracket, you would need to donate a car worth $7,500 and have total itemizations greater than $12,850 in order to reduce your taxes $500.
Just to add to the correct information from Judy, some charities distribute the cars they receive to needy individuals. In that case, you can take the fair market value of the vehicle, for example private party value. If that exceeds $5,000, you need a written appraisal. The charity has to tell you how they disposed of the car.
Can you itemized your deductions using a Schedule A? A Schedule A is used when your itemized deductions are more than your standard deduction. You can not have both. The only way to use this type of deduction is to itemized. For most average Americans, if they do not have mortgage interest (another item on Schedule A) they will not have enough to itemized and have to take the standard deduction then any charitable donations is out of the kindness of your heart.