The time to prepare for your taxes will be here before you know it, and regardless of your economic situation, it’s crucial that you stay on top of your finances. Financial planning is critical for individuals and families to achieve their financial goals both in the short and long term, and this may involve budgeting, tax planning, and managing assets. Here’s what you should know about financial planning as a charity donor.
Budgeting and Tax Planning As a Financial Donor
Budgeting is an essential component of financial planning, as it helps individuals and households track their income and expenses. You should consider incorporating budgeting into your financial planning routine regardless of how much money you make.
If you regularly donate to charity, you can incorporate your donations into your budget. For example, if you donate $100 to a local charity on a monthly basis, you can consider this regular payment when calculating your budget. Having an airtight budget may also enable you to give even more to your favorite charity because you can reduce unnecessary spending.
Giving to charity regularly or making single contributions also offers great tax benefits. When donating to charity, you are allowed to deduct up to 60% of your adjusted gross income, but not every type of charitable contribution qualifies, and the IRS may limit your deductions depending on the charitable organization. You can learn the full details of financial giving and tax deductions on the IRS’s website.
Receiving Tax Deductions After Donating Goods
Of course, money isn’t the only way to be charitable and make a difference in your local community — you can also donate your possessions and get a valuable tax deduction in the process. When donating goods such as clothing, toys, furniture, and vehicle parts, make sure to get a receipt from the receiving charity so that you can prove to the IRS that you donated.
One important note is that you can only deduct items that are considered to be in “good used condition” or better. For that reason, your charitable donations must be itemized, with each item’s value assessed.
Donating a Used Car
Donating your car is a great way to make a powerful impact on a family in need, and like with other possessions, you can expect a valuable tax deduction. Sadly, many of those living in Frederick County don’t have access to regular transportation, making financial planning incredibly challenging. Without reliable transportation, it’s difficult for individuals and families to hold down consistent employment. Plus, they may need to pay exorbitant fees for ridesharing services when they require immediate transportation, putting a further strain on their finances.
When one of these in-need families receives a car through our Low-Cost Vehicle Program, they can greatly improve their financial situation. Rather than having to rely on public transportation for school and work, they can count on their personal vehicle and use it to obtain better employment opportunities.
Tax Benefits of Donating Your Car to Second Chances Garage
If you donate your car to Second Chances Garage, you can deduct the vehicle’s sale price or its Kelley Blue Book “private party sale price.”
When we receive a vehicle, we assess whether it requires any repairs. If the car has less than 200,000 miles and is in good working condition, we place the car within our program in order to offer it to an individual or a family in need for a small fee. If your vehicle is accepted into our program, you’ll qualify for a tax deduction that’s equal to the Kelley Blue Book “private party sale value.”
In the event that your car does not qualify for our program but is still in decent shape, we will make repairs and sell it to a member of the public. Your tax deduction will reflect the sales price.
Finally, if your car is beyond reasonable repair, we’ll either recycle it or sell it for a small amount. Fortunately, you can still claim a $500 deduction even if its sales price is smaller than $500.
Making the decision to donate your car can make a world of difference in a family’s life. If you’re interested in donating or would like to learn more, call us today at 240-724-1919.