Finance Tax Time

The new IRS rules for vehicle donation went into effect January 1, 2005. “The new rules have significantly changed the amount most donors can deduct for their car donation”, according to Karen Campese, CEO of cars4charities, a national non-profit car donation center. “The old law allowed the donor to deduct the fair market value of their donated car. They were allowed to use a pricing guide such as the Kelley Blue Book or the National Automobile Dealers Association Guide to determine the fair market value of the car.”, says Campese. “Now, people who donate older, less valuable cars can deduct up to $500.

Those who donate more valuable cars can only deduct the amount the charity sells the car for. In most cases, the amount the charity sells the car for is less than the Blue book amount. In order to guarantee the donor the best tax deduction possible cars4charities now sets a minimum selling price on better vehicles.” According to Campese, “This rule change has resulted in a big decrease in the number of more valuable cars being donated to charity and a big increase in number of less valuable cars being donated.”

Karen Campese is the CEO of cars4charities, a non-profit car donation center.

For more information on car donation, call cars4charities at 1-866-448-3487 or log onto their website www.cars4charities.org.

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Donating your used car to charity is a win-win situation; the charity gets your gift and you get tax deduction. Below are some simple steps to make a car donation.

1. Understand the rules. A good place to read the government rule on car donation is IRS Publication 4303, A Donor’s Guide to Car Donations (available on the IRS’s website at www.irs.gov). This guide outlines some important rules regarding car donation. For example, one important rule states that car donation must be made to qualified organizations in order to be tax deductible.

2. Determine the value of your used car. Although the blue book might help you determine the value of your car, you should read IRS Publication 561, Determining the Value of Donated Property (available on the IRS’s website), to see what your car really worth.

3. Find a charity to donate your vehicle. If you are associated with any charity or non-profit organizations, that organization might be your choice for donating your car. Otherwise, check the Yellow Book or search on the Internet to find an organization to which you feel like donating your car. After you have identified a candidate, you should review IRS Publication 78, which is a list of organizations eligible to receive tax-deductible charitable contributions. This document is also available on the IRS’s website and it’s searchable. Make sure the candidate charity is eligible. Otherwise, you might not get your tax deduction!

4. Make your donation. After you have made the donation, make sure to ask for a written acknowledgement from the charity. You will need to attach this acknowledgement to your tax return in order to get your tax deduction.

John Lee is a freelance Internet writer. He has written articles for websites such as Car Donation Helper, (http://www.car4donation.com)

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Most people look forward to getting their tax return, but one of the downsides to filing taxes is that you may find yourself owing the taxman come April 15. What do you do when you realize that you not only owe money, but you owe more than you can pay at the time?

The answer is: charitable deductions.

Did you know that charitable contributions are deductible from your taxes? Most people only think of donations as being cash, and giving away more cash that you don’t have won’t help you in this case. However, there is another option available - donate your car. Do you have an old car sitting around (even if it doesn’t run) that you’re not using or are having a hard time selling? If so, you’re in luck! Many charities accept car donations, regardless of condition, and this contribution can be deducted from your taxes. There are a few steps you need to take in order to claim a deduction by way of car or other vehicle donation:

First thing you need to do is find out how much value you can get out of the car or other vehicle you plan to donate. Even old cars in poor condition are often accepted for donation, as they can still be sold for parts or scrap. There are sites that specialize in this kind of information, many of them free.

Find a charity or non-profit organization you believe in. It is one thing to donate a car simply for the tax relief, but find a charity that you feel strongly about to donate your car to. You won’t only be helping yourself, you will be helping others that you care about.

Thirdly, make your donation - making sure that it is tax deductible. In most cases this will be the full value of the vehicle (actual market value, not Blue Book), but state laws may vary for state income tax purposes. If you have any question about this, you should see your tax advisor.

To prevent over-estimate, the IRS requires people who donate their car to produce a document from the charitable organization specifying the resale price of the car after the car is sold off. Automobiles with retail values up to $500 are exempt from this rule. In any case, make sure you get a receipt detailing your car donation. Requesting a receipt may also be necessary if you have your taxes prepared by a paid preparer.

Donating a car may sound like a big undertaking, but it’s not. You can accomplish three things at once - getting rid of an old car that is taking up valuable space, helping your favorite charity, and getting a deduction on your income taxes. If you have an old car and want to reduce your tax payment, donating a car might be right for you!

For more information on car donation, please visit
Car Donation For Charity and Tax Relief.

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