The Process Of Giving to a Donate a Vehicle Tax Deduction Green Bay Charity

When looking to get a donate a vehicle tax deduction Green Bay donors need to understand the process itself. Not everybody is aware of this incentive, and even fewer people know exactly how it works. This article aims to educate donors  about how they would be able claim a tax deduction after donating a vehicle in Green Bay, Wisconsin.

The Donate a Vehicle Tax Deduction Green Bay Rule for Charities

There is one important rule that you have to comply with if you want to deduct the value of your donation from your taxable income. That rule is that your donation must have gone to a 501(c)3 registered charity. This tells the government that the money the organization raised will actually go to their service users and overall cause and not to other things, such as lobbying the government or illegal or unsavory activities. If your chosen charity meets those requirements, like Rawhide.org does, for instance, then you can make the donation and then claim the deduction.

The Donate a Vehicle Tax Deduction Green Bay Explanation About How Much Can Be Deducted

The next big question is how much you can deduct when filing your taxes. There are some rules to consider in terms of what the charity does with your donation. In most cases, they will sell the vehicle directly at auction. In those cases, the rules are as follows:

1. If the vehicle was sold for $500 or less, you can deduct $500 or the fair market value of your vehicle, whichever is less.
2. If the vehicle was sold for $501 to $5,000, you can deduct the amount that it was sold for, regardless of the fair market value of your vehicle.
3. If the vehicle was sold for more than $5,000, you can deduct the amount that it was sold for, regardless of the fair market value. However, you will also need to submit an independent valuation of the vehicle to show that the price is reasonable.

The process, as you can see, is reasonably simple. Your charity will send you a tax receipt with the value for which the vehicle was sold and an explanation of what they did with the vehicle. Essentially, the tax receipt, which is usually Form 1098-C, tells you exactly how much you can claim as tax deduction through Form 8283. Yes, it means filling out a few more boxes when filing taxes, but it's all for a great cause.