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Donating money and goods is a great way to help out
worthy causes while still helping yourself out on your
taxes. Car donation is no different. Even though some of
the car donation tax laws changed a few years back, this
is still a great way to help yourself and others. So if
you have an old car and just aren't quite sure what to
do with it, then consider a charitable donation of your
vehicle. The person who donates their car to charity can
deduct a value from their taxable income and the
recipient obviously benefits by either selling the car
to generate funds or making use of the vehicle.
Donating a junk car is a great way to help out your
chosen charity, and will also earn you a tax deduction.
While the tax deduction used to be set at a certain
amount, there have been recent changes to the laws
regarding deductions. Currently, the size of deduction
is based on the condition of the car. This change can be
beneficial if your car is in good shape. If it is in
poor shape, however, it will be reflected in a smaller
deduction. There can also be costs associated with
donating a junk car. Most charity brokers will charge a
small fee for pick-up, and many charities will as well.
Additionally, most charities will not accept a car that
does not have a title. While you can file a lost title
form with the DMV, they will charge a fee, and may not
even be able to recover a title.
As of 2005, the laws for car donation changed. For motor
vehicles, boats, and airplanes that are valued at more
than $500, things are a bit different than before. The
allowable amount of the deduction is now limited to
whatever amount the charity sells it for. The charity to
which your car donation is made is required to provide
you with written acknowledgement of your donation within
30 days of you making it. If the charity provides any
false or exaggerated acknowledgement, they can be
penalized.
As of the first of January in 2005, when you make a
car donation, the tax write off is based on how the
charity uses your donated car. If it is sold, you can
deduct the gross sale price. If, on the other hand, the
charity uses the car for what the new law calls
"significant" tax-approved work of charity, you would be
able to claim the market value of the vehicle. Again,
however, there are stiff penalties for falsified
documents.
Some of the charities, despite acknowledging that the
old laws had problems, are skeptical of the new car
donation laws. Many of these organizations are concerned
about what will happen when the tax deduction
responsibility is put in the hands of the charities
rather than the donors. A group of them actually sent a
letter to the Treasury Secretary suggesting that people
may be discouraged from donating when they are unaware
of their deduction amount. Not being able to weigh the
cost to the benefit of donation may discourage some auto
donations.
If you do choose to make a car donation, you will find
that the process is very easy. Most charities that offer
to take your vehicle will have information on line or
via phone about it. In many cases, in fact, you can fill
out the appropriate forms on line to get the process
underway. You also will likely not even have to be home
and the vehicle may not even need to be in working
condition. Many charities will come and toe your car
away if you can simply leave the title under a floor mat
along with the key and put it somewhere accessible. As
soon as the car is sold, you will receive a document in
the mail letting you know how much you can write off of
your taxes, legally.
Since many charities rely on donations of all sorts:
clothing, cars, money, and even appliances, think about
what you are doing when you make an auto donation. By
donating your vehicle, you are helping out a worthy
cause of your choice. In addition, you are helping
yourself out. Sure, the tax laws have changed, but you
can still benefit from your donation. The car doesn't
have to run to be eligible, so your write off might
still be more than selling it for junk. So feel good
about yourself, help your tax line, and get rid of that
old junker by donating your car.
