“Before You Give Your Vehicle To A Charitable Organization: Check Out The Charity, See If You’ll Get A Tax Benefit, Check The Value Of Your Vehicle, See What Your Responsibilities Are As A Donor To A Charity” (Vehicle Donation, IRS Publication 4303 Rev-1)
This time we will discuss a tax regulation that may be unique to the tax authorities in Indonesia. The US tax authority, Internal Revenue Service (IRS), issued a regulation through its publication number 4303. IRS Publications 4303 regulates the deductible car donations as tax expense. So simpelnya, an entity when donating the car through charity (charity), the value of the car can be a tax deduction company or called with deductible expense.
The publication explains that if tax deductions are an important consideration for the taxpayer when donating a car in a charity, what needs to be done is to check the charity, identify the value of the donated car, understand the responsibility as a donor.
“If a tax deduction is an important consideration for you when donating a car to a charity, you should check out the charity, check the value of your car, and see what your responsibilities are as a donor.” (IRS Publication 4303, A Donor’s Guide)
1. Selecting Charity
If a US taxpayer qualifies a car donation for federal income tax purposes (in the United States it is known as a federal tax term, as it is made up of states) and the taxpayer wants to claim a deduction to donate the car to a charity, the taxpayer must ensure that the agency The charity is a qualified organization. Otherwise, the donation will not be tax deductible. The most common types of qualification organizations are organizations, such as charitable, educational, or religious organizations, commonly referred to as “charities.” To verify that an organization is a qualified charity to receive tax deductible donations, it is worth looking at IRS publication 78 on the Cumulative List of Organizations, an annual list of most charities. Publication 78 is available online at www.irs.gov/eo or any questions may contact IRS call center.
2. Qualifying for Tax Deduction
The administrative requirement for such donations to be deductible is to fill the donation information in US tax form 1040. The taxpayer must consider certain limitations for the deduction of charitable contributions. For example, the deduction shall not exceed 50% of the gross income of the Taxpayer. Other limitations may also apply. In publication 526, Charity Contributions, provides detailed information on claiming deductions and restrictions on deductions. It also describes the types of organizations eligible to receive tax deductible dues. Publication 526 is available online at www.irs.gov or by calling (800) 829-3676 (free of charge).
3. Determining Value of The Car
The maximum deductible amount in the US taxpayer’s tax return is the fair value of the car. Fair Value is the price that the buyer is willing to pay and the seller is willing to accept the car, if no one is forced to buy or sell, and both parties have reasonable knowledge about the relevant facts. Some fundraisers mistakenly claim that in all cases donors can reduce the overall value of their cars as found in prices based on used car markets in used car guides (eg “blue book” value). Used car guides may be a good starting point for assessing cars, but taxpayers should be careful. The IRS will only allow a fair market reduction of the car market, which may be much smaller than the “blue book” value.
You donate your car to school for use by students who study car repair techniques. Your credit union representative tells you that the “blue book” value of the car is $ 1,600. However, your car needs extensive repairs, and after a few checks, you find that you can only sell your car for $ 750. Your charitable contribution deduction may not exceed $ 750, fair market value of the car.
4. Recordkeeping and Filing Requirements
Depending on the amount you claim to dedicate to charitable contributions, the taxpayer may need to obtain and keep certain records and submit additional forms to support his charity contributions. The following is a graph of Bookkeeping Requirements and Archiving of sources originated from IRS Publication 4303, A Donor’s Guide.
5. Transfer of Title
Generally, state charity officials ask the donor to transfer ownership of his car to the charity, to make copies of the titletransfer, and to notify the administration of the motor vehicle by updating information about the donor’s car registration regarding any sale or transfer. In some U.S. states, there are exceptions in this certification process, and third parties, such as charity agents, may be able to hold open ownership or enter dealer names. Before donating a car, the taxpayer must release his license plate, unless state law requires otherwise. This can help taxpayers avoid responsibility issues after the car is moved.
For article How to Donate Car in California please click here