Cars For Charity – What You Need To Know About Your Donation
It seems like an simple affair to do – accord a car to a alms you support, and get a tax breach in the deal. Until 2005, it in fact was about that simple. All you had to do was actuate the fair bazaar amount of your vehicle, and aces a alms that accustomed cars. Today, the rules accept afflicted a bit, abundantly in acknowledgment to a address by a Government Accounting Office that totalled absent tax acquirement from over-valued cars at added than $650 actor in the year It seems like an simple affair to do – accord a car to a alms you support, and get a tax breach in the deal. Until 2005, it in fact was about that simple. All you had to do was actuate the fair bazaar amount of your vehicle, and aces a alms that accustomed cars. Today, the rules accept afflicted a bit, abundantly in acknowledgment to a address by a Government Accounting Office that totalled absent tax acquirement from over-valued cars at added than $650 actor in the year 2000.
So, should you still accord your car to charity? Absolutely. But there are caps on what you can claim:
$500 Limits
Generally speaking, there is a $500 amount beginning for able vehicles. This doesn’t beggarly that your donated car can’t be account more, but it does beggarly that if it is, you’ll accept to do some added documentation.(This beginning applies to planes and boats as able-bodied as cars.)
Valuation Ceilings
If your car has a fair bazaar amount of added than $500 (as bent by sources like the Kelley Blue Book), and the alms that accustomed it again turns about and sells it, you cannot affirmation added than their affairs price. (Example – you accord a auto account $1,000 and the alms sells it for $750. You can’t affirmation added than $750 as a deduction.) In addition, the alms has to accommodate accounting affidavit of the donated vehicle’s IRS-allowable answer aural 30 canicule of accepting the car, or aural 30 canicule of affairs it if they do so. You accept to cover this affidavit with your tax acknowledgment if you file.
Below-Market Resale
But what if the alms you donated your car to sells it far beneath market? Or what if they accord it away? You may still be able to affirmation the abounding $500 even if your car was awash for alone $250. Again, the alms in catechism accept to accord you documentation, this time that the auction or allowance was to a beggared person.
Intervening Use
Aside from the rules above, there is an “intervening use” article in the new regulations. Basically, if you accord your car to a charity, which again uses it to accomplish deliveries or pickups (or for added work-related reasons) afore affairs it for beneath than your estimated $1,000, you may be able to still abstract the abounding $1,000 if they accommodate affidavit of use as able-bodied as affidavit of sale.
In accession to the banned on how abundant you can deduct, and what affidavit you accept to have, deductions for donated cars accept to still chase all the rules for any added alms deductions you may have. The three a lot of important rules are:
Donation accept to be aural the tax year.
This agency that your car accept to be donated by December 31, 2007 to be included as a answer on your 2007 taxes.
Deductions accept to be itemized.
If your car is the alone answer you can claim, you may wish to accede affairs it outright, as you can alone get a tax breach for it if your itemized deductions on a 1040-A beat the accepted answer that would commonly administer to you.
Documentation accept to be submitted with your return.
While it acclimated to be accepted for you (the donor) to absorb the cancellation from your alms in case of a catechism later, it is now appropriate that such affidavit be included with your w-2’s if you abide your return. (Make abiding you accumulate a copy.)
After all this, should you still accord a car to charity? Yes. In a lot of cases it’s benign both to you and the accepting alms – and there are about 4,000 charities beyond the country that yield donated vehicles.
One final tip though? Always argue your tax advisor.
Author: Linday Kaplan
Source: articledashboard.com
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