Donate That Car Before The End Of The Year

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By By Herb Weisbaum

Summary

If you've been thinking about donating a vehicle to charity you'd better get moving as the tax law changes January 1.

Story Published: Dec 21, 2004 at 11:24 PM PDT

Story Updated: Aug 31, 2006 at 1:49 AM PDT

Donate That Car Before The End Of The Year
SEATTLE - So you have an old car, truck, or boat that you’ve been thinking about donating to charity. If you want the maximum tax deduction for your donation, you’d better get moving. The tax law changes January 1.

Vehicle donations have been a boon to charities around the northwest. They get the money when the vehicle is sold, and the donor gets an easy way to unload an old vehicle and pick up a nice tax deduction to boot.

But Congress felt that too many people across the country were taking advantage of this tax break, by inflating the value of their vehicle. So, it changed the rules.

Right now, when you donate a vehicle, you get to deduct its fair market value, what you could actually expect to make if you sold the vehicle yourself.

Starting January 1, if you’re claiming a deduction of more than $500 for that vehicle, you are limited to the amount the charity actually gets when it sells that vehicle. The charity is required to send you that information within 30 days of your contribution.

The only way you can deduct the fair market value of the vehicle, which would give you a bigger deduction, is if the charity keeps the vehicle and uses it. Find a charity that needs a vehicle and you’re set.

Remember, the change in the vehicle donation deduction only matters if you itemize your deductions. If you don’t itemize, there’s no rush.

For More Information:

www.irs.gov

seattletimes.nwsource.com

www.usatoday.com

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