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Meegan | How much would deducting $2500 on your taxes save? |
I'm thinking of donating a working car to a charity for actual usage (not to be sold at auction). In which case i would be able to claim the actual fair market value of the car on my taxes, which is $2500. How much would that actually save me? and yes, i looked it up, if the charity is actually USING the car and not selling it for a profit, i can deduct the fair market value.
Additional Details
i know i need to furnish info such as my income and tax bracket, etc. but i was hoping maybe someone who has donted a car could tell me if it saved them very much or was worth it. i just don't know what to do with this car anymore! no one wants it and it's costing me $150 a month in insurance to keep it. and that's minimum coverage! i live in Baltimore! |
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Doe
 |
In order to realize any tax benefit, you have to first itemize your deductions on Schedule A instead of taking the standard deduction. Most people who rent instead of owning their own home don't itemize, so in that case your tax savings is zero.
If you itemize, your true savings depends on two things: First, your tax bracket: if you are in a 15% bracket your savings will be $375. It will be more for a higher tax bracket. The second consideration only applies to people with higher incomes, generally over 100K. Then you are limited on the amount you can itemize. (Unfortunately, this doesn't affect too many of us!)
In addition, if your state has a tax break for charitable deductions, you may have savings there, too, although not as much. Every little bit helps! |
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Lianne
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Approximately your tax rate times $2500 so if tax rate is 10% it's 10% x 2500 and so on. |
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Judy1
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If you're currently itemizing, would save you $2500 times whatever your tax bracket is, probably 15 or 25%, so $375-$675 depending on your bracket.
If you're not currently itemizing, might not save you anything, since you only get to take the deduction if you itemize, and unless you're already fairly close to the standard deduction, you wouldn't itemize with this. At best, would be less than the amounts listed above. |
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n3wjl
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Depends on your tax bracket which depenmds on how much you make a year. It also depends on fileing status and other deductions.
Most likely either 15% or 28% of the vaule at most. |
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Grubes
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It depends on what tax bracket you're in. Somewhere in the 15-28% range for most people. Take the amount of the deduction times the rate that you're in for roughly the amount of tax you'll save, not including state tax. |
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Mal
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you have to qualify for itemizing your deductions first after that you multiply the access with your tax bracket |
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gman2080x
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Probably $500. Therefore, unless you really like the charity or just want to do something 'good', I recommend you just sell the car or use the trade-in value towards the purchase of a new car. This is not intended to be insensitive, it is just reality. As a rational consumer, you should probably sell the car.
The current US federal income tax code only provides a tax deduction for charitable contributions as an itemized deduction. So let's assume you own a home with a mortgage, so you are already itemizing deductions. The fair value of the car would increase those deductions, decreasing your taxable income. Let's say you're currently paying at a 20% tax rate (could be as high as 35% or as low as 0%), so this donation would provide you with a tax benefit of $500 (20% * $2500). Note that there are some state tax benefits as well however the real $ is the federal $.
Again, unless you really like the charity and/or want to do something nice, I suggest you sell the car. Then you can take part of the proceeds and give it to the charity (claiming that as a charitable contribution). |
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Linuxiac
 |
The new tax code for deductions of cars requires that you only claim the actual price it gets at their auction! If they don't sell the car, then your basis becomes the lower of auction prices for junk!
Yes, it is once again the IRS dictation to the tax payer, proving that one of the biggest bureaucracys on the planet, with over 100,000 employees all sucking off of the public teat, is just an OLD BOYS network for the rich politicians to avoid taxation.
http://fairtax.org http://cagw.org |
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CactusFlower
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There is not a clean-cut answer for this because it depends on too many factors.. your filing status, how much money you make to begin with, etc etc. The answer is not going to be the same for everyone. I donate approximately $500 a year in cash and goods to places like thrift shops and it makes no difference on my taxes. It is not going to save you $2500, in case you are wondering............... and you best keep receipts and make sure the charity is a 501c because if you are ever audited the IRS is going to question a $2500 donation. Keep all receipts for at least 7 years as that's how far back the IRS can audit. |
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nova_queen_28
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First thing is, do you itemize your taxes?
If not, donating the car will not save you anything, assuming you could claim the full $2,500 as a charitible contribution.
In the event you do itemize your taxes, you would need to know your tax rate to determine how it would benefit you. To give you a ballpark idea you would multiply your tax rate by the $2,500 to give you an idea of the break you would obtain (10% = $250 tax benefit, 15% = $375 tax benefit, 20% = $500 benefit, and so on).
Keep in mind there are other factors that could actually limit the amount of the deduction and tax benefit. |
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