On this Memorial Day, we stop to give honor and thanks to all those who gave of themselves, and those who made sacrifices to protect our freedom.
We remember, and we thank you!
Question – What is the tax deduction when I donate my car?
Example – When you donate your old car to charity, what’s the write-off?
Answer – Kelly Blue Book Value or Price at which the donated car is sold by the charity?
The answer is PRICE AT WHICH THE DONATED CAR IS SOLD BY THE CHARITY.
In most cases, your deduction is limited to the price paid for the vehicle when it is sold by the charity to raise cash. But, there’s a notable exception:
If the charity uses the vehicle in its mission (to deliver meals to the needy, for example) or fixes it up and gives it (or sells it for less than market value) to a needy family, you are allowed to claim a deduction equal to the vehicle’s fair market value (check used car guidebooks or Web sites). That could produce a bigger write-off since the value a charity gets at auction is likely to be a lower wholesale or even fire-sale price.
Question – Are all Charitable Donations Tax Deductible?
Example – You have made a large number of charitable donations in one year. Sky’s the limit on doing good—and cutting down taxable income, right?
Answer – True or False?
The answer is FALSE.
As far as Congress is concerned, it is possible to be too generous. Generally, your deduction for donations to charity in one year cannot exceed 50% of your adjusted gross income for that year (30% in the case of donations of appreciated assets and contributions to private foundations). But any excess can be carried over for up to five tax years to deliver the tax break you’re due.
Question – Are gambling losses Tax Deductible?
Example – You spent a few weekends in Vegas last year. One weekend, you won money. For the rest, your wallet came back a little worse for wear. Luckily gambling losses are tax deductible.
Answer – True or False?
The answer is TRUE.
You can deduct losses … but only to the extent of the gambling winnings you report as taxable income. And, while the law calls for all gamblers to report 100% of their winnings, only the 25% or so of taxpayers who itemize get the chance to deduct losses. Those who use the standard deduction don’t get this tax break.
One bright spot: Although gambling losses are considered miscellaneous expenses to be deducted on Schedule A of the Form 1040, this write-off is not restricted by the rule that generally allows miscellaneous expenses only to the extent they total more than 2% of your adjusted gross income. Gambling losses are deductible dollar for dollar, up to the amount of winnings reported.