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Car Donation Explained
by Joe Hanoa
What can be more noble than donating your old car to charity? You save yourself the hassle of having to sell the
old used vehicle outright. You don’t have to run an ad, answer the phone calls regarding the car, and stay home to
show the car. You don’t have to worry about test drives, bad checks or who is going to knock on your door. You can
avoid all of these problems by donating the car to charity and obtaining a tax deduction for the donation. Beware!
Part of this tax loophole has been closed. Before you donate a car to charity you should know what the relevant tax
laws are.
It used to be that the taxpayer who donated a car to charity could deduct the fair market value of the vehicle. Now
the allowable deduction is $500 for a car donated to charity if the charity sells the vehicle, which most charities
do. You cannot deduct the fair market value of the donated vehicle unless certain conditions are fulfilled. The
charity must make improvements to the car and give it to a needy person. If the charity does this with your donated
vehicle and it is documented, then you donor can deduct the fair market value of the vehicle. This is also true for
planes, boats, and other vehicles. Specific tax forms have to be filled out and filed in order for the fair market
value deduction to be allowed.
An internet search reveals that almost every charity will accept the donation of cars and other vehicles. They make
it very simple for the donor in that all the donor has to do is to sign over the title. The charity handles the
pick-up and transportation of the vehicle. Most charities then sell the car at auctions like E-Bay. The money from
the sale is then used for their charitable works. Some charities, like the Salvation Army, have their own used car
lots where they sell the donated vehicles. This is the situation that results in a $500 tax deduction for the
donor.
Some charities accept car donations and use them for occupational training for the disadvantaged. They fix the cars
and make improvements and then give the car to a needy individual. This kind of situation results in people
receiving occupational training and a needy individual receiving a functioning car. This is the situation where the
donor can deduct the fair market value of the car.
As the creator of Donation Guide, I urge you to visit our website today if you are seeking
information on Donating a Car. We promise you won’t be disappointed with what you find.
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