Want to gain substantial tax deductions at the end of the year? Donate that old car you no longer use. Even the IRS has taken steps to make the car donation process simpler to speedily benefit those in need. One of these steps is the easier way owners can now calculate the fair market value of their car.
Prior to January 2005, the IRS allowed people to compute their tax deduction based on their car donation’s market value regardless of how much or how little the vehicle sold for. Determining the market value of a donated vehicle is an often intricate and time-consuming process, which made computing for a tax deduction very confusing. The tax law that went into effect January 2005 took the guesswork out of determining the value of a donated vehicle. Your charitable deduction is based on the gross sale price of the vehicle.
Donating your unused vehicle to charity is a great way to score a tax deduction. Fortunately it isn’t only the IRS that’s making the process simple for you but various car donation processing centers as well. All you have to do is inform them about your plans to donate, and they will do the rest. They can ensure that the funds from the sale of your car donation goes to a qualified organization, and that you can get the maximum tax deduction amount out of it.