The Gift of Car Deduction
If you own an old car that mortifies your children and embarrasses your mate, perhaps it is time to donate your old, or not so old, clunker to charity and get a tax deduction.
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Significance
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The economic downturn has hurt charities while their needs have risen. Human services charities that help the extremely poor often depend on used car donations.
Tax Deduction
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Congress tightened the rules on charitable car deductions in 2005. The law states that most taxpayers can only deduct the amount the charity receives when it sells the donated vehicle.
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Considerations
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Make sure the charity can receive tax deductible contributions. Be sure to obtain a receipt. If the car is worth more than $500 section A of IRS form 8283 must be filed; if worth more than $5,000 section B must be completed. The donor, not the charity, is the one who may be audited and penalized.
Documentation
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In addition to the receipt, take and keep a picture of the donated car. Save any receipts from repairs or new tire purchases to backup the donated value.
Choosing a Charity
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When you choose a charity, make sure it has nationwide and local pick up. Most charities will pick up the car at no charge.
Hidden Costs and Other Tips
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Make sure there are no hidden costs or charges when you donate. Find out what kind of car the charity will accept. Make sure you have the car's title.
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