Donate a Car
- and help others too!
Updated:
How about you donate a car to charity?
Donate a car sounds like it's going to cost you a lot, but in fact that's not true. If you donate a
car that doesn't even work to charity , you can get some benefit from a tax receipt. That'll reduce your taxes, and
we could all do with that, right? Take a look below at how to donate a car and you'll see how easy it is.
Donating Cars To Charity - New Tax Rules
by Richard A. Chapo
On June 3, 2005, the IRS released guidance on charitable deductions for donated vehicles. The American Jobs
Creation Act (AJCA) radically changed the amount of the deduction taxpayers can claim for their donated car.
Fair Market Value v. Actual Sales Price
When donating a car to charity, a taxpayer traditionally was allowed to deduct the fair market value. The new law
changes this valuation to the actual sales price of the vehicle when sold by the charity. The taxpayer is also
required to get written and timely acknowledgment from the charity in order to claim the deduction
The AJCA does provide some limited exceptions under which a donor may claim a fair market value deduction. If the
charity makes a significant intervening use of a vehicle--such as regular use to deliver meals on wheels-- the
donor may deduct the full fair market value. For example, driving a vehicle a total of 10,000 miles over a one-year
period to deliver meals is a significant intervening use.
The AJCA also allows a donor to claim a fair market value deduction if the charity makes a material improvement to
the vehicle. Under the guidance, a material improvement means major repairs that significantly increase the value
of a vehicle, and not mere painting or cleaning.
| Basically, whatever condition your car is in, if you donate a car, you can get a
receipt from a charity, and everyone benefits. So think about if you can donate a car
today! ~ Site Editor |
Interestingly, the IRS has also added an exemption not included in the AJCA. On its own, the IRS has determined
that taxpayers can claim a deduction for the fair market value of a donated vehicle if the charity gives or sells
the vehicle at a significantly below-market price to a needy individual, as long as the transfer furthers the
charitable purpose of helping a poor person in need of a means of transportation.
If you intend to assert one of these exemptions, how do you determine the fair market value? Generally, vehicle
pricing guidelines and publications differentiate between trade-in, private-party, and dealer retail prices. The
IRS consider the fair market value for vehicle donation purposes to be no higher than the private-party price.
The new provisions of the Americans Job Creation Act certainly make it less attractive to donate a car to charity.
Using the exemptions, however, you can still create a sizeable deduction while helping others who are less
fortunate.
|
Richard Chapo is CEO of <strong>Business Tax
Recovery</strong> - We recover overpaid business taxes for small businesses. 80% are due
refunds of $5,000 to $10,000 on past tax filings. Contact us now to find out how much you are
owed.
|
2007 www-auto-donation.com
car donations | donating a car | donate a
car
|