Your Boat Donation Value And Tax Deductions

When you donate boat to charity you can save on the hassle of finding a buyer and haggling over the price, plus you feel all warm and fuzzy inside. However, if you do not take the appropriate deduction amount, you may more than make up the hassle you have saved if the IRS audits your return.

Donations Over $500

If you make a boat donation to charity, most likely the charity is going to sell it to raise money for its mission. If so, you are able to deduct the sale price the charity gets when it sells the boat.

Fair Market Value

If the charity uses the boat for its mission, you may deduct the fair market value (FMV) of the boat instead. For example, if the charity happens to promote marine safety and subsequently uses your donated boat to do safety demonstrations, you could deduct the FMV of the boat. At the same time, if the charity gives or sells the boat to a less fortunate individual at below-market value as part of its mission, you may also deduct the fair market value. For instance, if the charity sells boats to needy families below FMV so that they can get around in an island community, you may deduct the fair market value.

Sales Below $500

If the charity happens to sell your boat for less than $500, a special rule is applied: you may deduct the smaller of the FMV of the boat or $500. Lets say your boat is worth $1,000 and it sells for $300. Since $500 is smaller than the FMV, you may deduct $500. Though, if the boat is worth $400 and it sold for $300, you can only deduct $400 because the FMV is less than $500.

Tax Forms

After you donate your boat, the charity will give you a Form 1098-C that will show how much the charity received when it sold the boat. When you filing your income taxes, you must use Schedule A when itemizing your deductions to claim the donation. If the donation is worth more than $500, you must attach Form 8283 in order to document the donation. Boats valued at over $5,000 will require a qualified appraisal.

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