Does the fair market value of my automobile donation get deducted from the taxes owed at the end of the year?
No. What you are referring to is a tax credit. Tax credits have not existed since the Kennedy administration and were Investment Tax Credits. Such credits were designed to stimulate investments by business in capital goods and equipment by allowing a percentage of the purchase price as a credit against taxes due and not merely as a deduction from taxable income. However, the fair market value does reduce your total tax liability (the amount you owe) assuming you are in a position where you can claim a tax deduction for a charitable contribution. Not everyone can do this. You have to “itemize” deductions. If you file a 1040 Short Form you are not itemizing deductions. If you are in question as to whether or not you itemize deductions please ask the person that does your tax return each year. He/she will know. Top of page.
