New tax laws that went into effect in 2005 have led to more paperwork for folks who want to make a car donation and claim a tax write-off.
With the tighter tax laws, charities are providing IRS forms as part of their car donation services. If donors claim a deduction of more than $500 for the donated vehicle, they will need to file IRS Form 1098-C.
But don't let the redtape deter you. Reputable charities provide the forms, or a written acknowledgement disclosing how much the donated auto sold for at auction.
The amount of the gross proceeds is the amount of the tax deduction. Expect to get the form from the charity within a month of the sale. If the form arrives after a tax return is filed, the donor needs to file an amendment to the return. Talk to an accountant for more information.
If the donated vehicle is worth $500 or less, the taxpayer doesn't need to file Form 1098-C. But the donor still needs a receipt from the charity stating the value of the vehicle donation.
Now one of the top on-line publishers in the world, LifeTips offers tips to millions of monthly visitors. Our mission mission is to make your life smarter, better, faster and wiser. Expert writers earn dough for what they know. And exclusive sponsors in each niche topic help us make-it-all happen.