A Guide to the 1098 Form and Your Taxes

You may fill out this form, found online at IRS.gov/Form1098C, and send Copies B and C to the donor. Taxpayers with income of $79,000 or less last year – and that’s most taxpayers – can use IRS Free File Guided Tax Software https://turbo-tax.org/ now through Oct 15. IRS Free File Fillable forms, a part of this program, is available at no cost to any income level and provides electronic forms that people fill out and e-file themselves, also at no cost.

  1. As the form’s name indicates, Form 1098-C isn’t used for reporting only car donations.
  2. If there is more than one property securing the mortgage, you may report the address of any one of the properties using boxes 7 and 8 and enter in box 9 the total number of properties securing the mortgage..
  3. Student loan interest taxation has changed from tax year 2022 to tax year 2023 by increasing the income phase out range for married couples filing joint returns.
  4. Additionally, interest received from a corporation, partnership, trust, estate, association, or company (other than a sole proprietor) does not require filing a Form 1098.

When you donate a qualified vehicle valued at more than $500, the organization files Form 1098-C to report the details of the donation and provide you with a copy for your return. Do not file Form 1098-C for a contribution of a qualified vehicle with a claimed value of $500 or less. However, you may use it as the contemporaneous written acknowledgment under section 170(f)(8) by providing the donor with Copy C only. If you use Copy C as the acknowledgment, you must check box 7. In addition, do not complete boxes 4a through 5c or enter the donor’s TIN on the form.

Form SSA 1724 Instructions

You may, but are not required to, enter the donee’s federal TIN on the form. A donee organization must file a separate Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, with the IRS for each contribution of a qualified vehicle that has a claimed value of more than $500. A qualified vehicle is any motor vehicle manufactured primarily for use on public streets, roads, and highways; a boat; or an airplane. However, property held by the donor primarily for sale to customers, such as inventory of a car dealer, is not a qualified vehicle. The Volunteer Income Tax Assistance (VITA) program offers free tax help to people who generally make $64,000 or less, persons with disabilities and taxpayers whose preferred language is not English.

This box, if completed, contains the organization’s description of goods and services exchanged for the vehicle. If the donee has checked the box in this section, this means that the donee certifies the goods and services consisted solely of intangible religious benefits. If completed, Box 5c will contain the charitable organization’s description of future improvements or intended significant use of the donated vehicle. If the fair value is $500 or less, this box might be empty. If the donee has checked this box, this means that the donee intends to transfer the vehicle to a needy individual for much lower than the vehicle’s fair market value.

IRS Form 8889 Instructions

There is significant intervening use only if the organization actually uses the vehicle to substantially further the organization’s regularly conducted activities, and the use is significant, not incidental. Factors in determining whether a use is a significant intervening use include its nature, extent, frequency, and duration. For this purpose, use includes providing transportation on a regular basis for a significant period of time or significant use directly relating to training in vehicle repair. Use does not include the use of a vehicle to provide training in business skills, such as marketing or sales.

Other information reported on Form 1098-C

You are not required to report reimbursements of overpaid interest aggregating less than $600 unless you are otherwise required to file Form 1098. That is, if you did not receive at least $600 of mortgage interest during the year of reimbursement from the person to whom you made the reimbursement, you are not required to file Form 1098 merely to report a reimbursement of less than $600. However, you may report any reimbursement of overpaid interest that you are not otherwise required to report, but if you do, you are subject to the rules in these instructions. You have to include this form with your tax return if you claim more than $500 as a deduction for the donation. Generally, the charity is required to provide this form within 30 days from the date of the sale of the vehicle if box 4a is checked or 30 days from the date of the contribution if box 5a or 5b is checked.

Most Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) related refunds should be available in bank accounts or on debit cards by Feb. 27 if taxpayers chose direct deposit and there are no other issues with their tax return. Will be updated with projected deposit dates for most early EITC and ACTC refund filers by Feb. 17. As part of expanded taxpayer service efforts, nearly 250 IRS TACs around the country will extend their weekly office hours to give taxpayers additional time to get the help they need during the filing season. The IRS reminds taxpayers the deadline to file a 2023 tax return and pay any tax owed is Monday, April 15, 2024. Taxpayers living in Maine or Massachusetts have until April 17, 2024, due to the Patriot’s Day and Emancipation Day holidays.

I especially like to explore financial planning subjects that no one else has tackled before, and help people with financial questions they haven’t found the answers to. This tax form is available on the IRS website in PDF format. For your convenience, we’ve included the most recent version of this form at the bottom of our article. Material improvements are improvements that improve the vehicle’s condition in a way that greatly increases the value of that vehicle.

Describe in detail the intended material improvements to be made by the organization or the intended significant intervening use and duration of the use by the organization. Material improvements include major repairs and additions that improve the condition of the vehicle in a manner that significantly increases the value. To be a material improvement, the improvement cannot be funded by an additional payment to the donee from the donor of the vehicle. Material improvements do not include cleaning, minor repairs, routine maintenance, painting, removal of dents or scratches, cleaning or repair of upholstery, and installation of theft deterrent devices. If you checked box 4a, enter the date that the vehicle was sold in the arm’s length transaction. Enter points paid on the purchase of the payer of record’s principal residence.

What is a contemporaneous written acknowledgment?

WASHINGTON — The Internal Revenue Service successfully opened the 2024 tax season today by accepting and processing federal individual tax returns as the agency continues focusing on expanding options to help taxpayers. If the address of the property securing the mortgage is not the same as the payer’s/borrower’s 1098c mailing address, or you did not complete box 7, enter the street address (including the apartment number) of the property securing the mortgage. Immediately below the street address, enter the city or town; state or province; country; and ZIP or foreign postal code of the property securing the mortgage.

The 1098-C form is only required when the claimed value of the donated vehicle exceeds $500. According to the tax law, a contemporaneous written acknowledgement is required within 30 days of the vehicle’s donation. Without this written acknowledgement, the donor cannot legally claim a deduction of more than $500. But the donee organization completes this form, not the donor. This ensures that a series of checks and balances exists so that donors don’t get into trouble for improperly claiming this tax deduction. If this box is checked, this indicates that the charitable organization does not intend to sell or transfer the vehicle without either material improvements or significant intervening use.

Even if the lender of record intends to sell or otherwise transfer the loan to a third party after the close of the transaction, such intention does not change who is the lender of record. An interest recipient, including a recipient of points, can designate a qualified person to file Form 1098 and to provide a statement to the payer of record. If you are not a U.S. person, you must file Form 1098 if the interest is received in the United States. A U.S. person is a citizen or resident of the United States, a domestic partnership or corporation, or a nonforeign estate or trust. Interest (other than points) received on any mortgage that is in the form of a line of credit or credit card obligation is reportable regardless of how you classified the obligation.

Leave a Comment