The charity has to accept non-cash donations.The charity has to be eligible to receive tax deductible contributions.The IRS has made it difficult enough that I would recommend selling it on Craig’s List instead. And that is worth, well, $3,000.ĭo car donations still make sense under stricter IRS regulations? If you are in the 25% tax bracket the donation is worth $1,000.Īlternately, selling a $4,000 car on Craig’s list for $3,000 is attractive and easy. If you are in the 15% marginal tax bracket the donation is worth $600. Since the transfer of vehicle from child to parent only costs $35 and the donation of the vehicle will reward you with a $4,000 tax deduction it would make sense for you to take ownership of the vehicle and donate it yourself rather than for your daughter to donate it. The SUT 1 does not need to be notarized, but the SUT 1A does need to be certified. If the vehicle is 5 years or younger, you need to use form SUT 1A: Affidavit for Procurement of Title. The form is SUT 1: Vehicle Price Certification (Bill of Sale) This form is used by individuals (not motor vehicle dealers) to certify the purchase price of a motor vehicle more than 5 years old in order to obtain a vehicle title. You can document the sale at $0.Īgain, the DMV has in its list of forms a form for this transaction. Such a transfer is subject to a fee of 3% of the sales price or $35 whichever is greater. There is no Sales and Use exemption available for a gift from child for parent. We have several notaries public in our office just for such occasions. The DMV SUT3 must be notarized by a notary public. (All of the DMV vehicle forms are available at ) One of those exemptions is, “a gift to the spouse, son, or daughter of the transferor.” In order to qualify for this Sales and Use Tax exemption you must fill out DMV Form SUT 3: Purchaser’s Statement of Tax Exemption. No tax is imposed if the transfer meets any of a number of exemptions. During the titling process, the state takes either the 3% rate or $35, depending on which one is higher. This one-time tax is based on 3% of a vehicle’s gross sales price, and is charged whenever a vehicle changes ownership. Virginia has a vehicle “Sales and Use” tax. Taxation on buying or selling a car in Virginia Here’s how to use this exchange and still minimize your taxes: Sometimes a simple question doesn’t have a simple answer. Should we exchange cars so that I can gift her car for the tax deduction? She currently does not pay any income tax. I would like to give my daughter my newer car (worth about $9,000) and she would get rid of her older car (worth about $4,000).
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