How to Deduct Charitable Donations?

How can I deduct charitable donations?

You can only deduct charitable donations only if they are made to qualified charitable organizations such as:

• churches
• federal, state and local governments and
• other organizations approved by the IRS

So, before deducting any charitable donations, make sure that the charitable donations are eligible for tax deduction and that you donated to qualified charitable organizations, not just to people or organizations that need the donations.

How much to deduct for charitable donations?

To deduct charitable donations, you will first have to determine the fair market value of each donation.

Determining fair market value of a vehicle charitable donation

A used car guide may be a good starting point for finding the fair market value of your vehicle. These guides, published by commercial firms and trade organizations, contain vehicle sale prices for recent model years. The guides are sometimes available from public libraries, banks, credit unions, or finance companies. You can also find used car pricing information on the Internet. An acceptable measure of the fair market value of a donated vehicle is an amount not in excess of the price listed in a used vehicle pricing guide for a private party sale of a similar vehicle.

However the fair market value may be less then that amount if the vehicle has engine trouble, body damage, high mileage or any type of excessive wear. The fair market value of a donated vehicle is the same as the price listed in a used vehicle pricing guide for a private party sale only if the guide listes a sales price for a vehicle that is the same make, model, and year, sold inthe same area, in the same coindition, with the same or similar options or accessories, and with the same or similar warranties as the donated vehicle.

When do I need to file the form 8283?

If your charitable donation is over $500 in any year, you are required to file the form 8283, Noncash Charitable Contributions to give more information about them.