Taxpayers everywhere have heard commercials on radio and television urging them to donate their cars to charity in order to receive a deduction when filing season comes around.
However, the IRS is advising people that there can be certain pitfalls when it comes to such donations. For example, one important detail to focus on is the actual market value of the vehicle in question.
The IRS Web site notes that various guides are available where people can determine the typical sale prices for many vehicle models. However, it adds that adjustments are typically made for "unusual equipment, unusual mileage, and unusual condition."
For example, things like body damage, engine trouble and high mileage are among the things that will bring a vehicle''s value lower than one may hope. If a car typically sells for less in a private sale than it does at the retail level, this could also bring down its market value.
Typically, these vehicles are sold at auction by the charities that receive them. This can also reduce the amount of the deduction that a donor may otherwise be expecting.
Taxpayers also need to be sure an organization is qualified to receive tax deductible donations from the IRS, and they generally need to itemize their deduction when filing time comes around.
Liberty Tax Service provides computerized income tax preparation and electronic filing. Each tax office offers customers audit assistance, a money back guarantee, and free tax return checking.