If you make a car donation to a charity in Milwaukee, Wisconsin, you can make some significant tax savings. The car donation tax deduction Milwaukee donors can make is only possible, however, if they include it in their charitable contribution deduction, which in turn can only be done if the charity is 501(c)3 registered. It is very important that you plan ahead, so that you can maximize your deduction. The IRS (Internal Revenue Service) wants you to use one of two methods to calculate how much you can get back, which depends on what the charity does with the vehicle.
A car donation Milwaukee charity can sell the vehicle, in which case you can make a deduction based on the actual selling price. Alternatively, the charity can actually use the vehicle for other purposes, in which case the fair market value of the vehicle can be deducted.
The Car Donation Tax Deduction Milwaukee Process
Getting the highest deduction from your car donation charity Milwaukee efforts is down to four steps:
Step 1 - Find out if the charity sold the vehicle and, if so, for how much.
A good charity will provide you with a tax receipt within 30 days of you making the donation.
Step 2 - Determine the fair market value of the vehicle.
You do this if the charity uses rather than sells the car. You could, for instance, check the Kelley Blue Book for this.
Step 3 - Make your deduction by completing line 17 of Schedule A.
This does mean that you have to itemize your tax deductions, and that all your eligible deductible expenses exceed the amount that is allowed as a standard deduction under the rules of Schedule A.
Step 4 - Complete Form 8283 if required.
If the vehicle was sold for, or is valued at, less than $500, you do not need to do this. If the value is between $501 and $5,000, you must complete Form 8283 Section A. If the value of the vehicle is $5,001 or more, you must complete Form 8283 Section B. You also have to provide proof of a written appraisal in this case.