Best Car Donation Tips To Save
You Money On Your Taxes
by J. Johanson
In the United States it's possible to
donate a vehicle (usually a car, but it can be a boat or any
other form of transportation) to certain charities, and in
return be able to claim a tax deduction on your personal
income tax return. A car donation may be accepted on the
condition that the vehicle doesn't have to run but should be
in towing condition. A charitable car donation may be worth
more than a trade-in.
The new rules allow the donor to
deduct only the amount the charity receives for the vehicle.
Charities usually provide you with a release of liability
when they take your vehicle, and after the car sells, they
send you a tax-deduction form that explains how much they
received for your car. There have been car donors who needed
a new vehicle and they ended up buying donated and repaired
vehicles.
You may have an old vehicle sitting on
your property or on the street that you don't use very
often. Make sure you have the title in hand if you call in
your donation.
You can usually donate a sad-looking
car that's not running, depending on the charity. The donor
benefits from the donation by receiving a tax receipt for
the highest possible value of the vehicle. It's good to know
that when you donate a car, you'll get it off your property
within just a couple of days, freeing up space in the
garage, in the driveway or even your yard.
Your vehicle has to have all four of
the tires inflated in order to be accepted. By donating a
car it can eliminate spending money on repairs, advertising
fees and the problems or liabilities associated with selling
a vehicle. In some cases charitable car donors can still
claim fair market value for their used vehicle.
If your automobile, truck, boat,
motorcycle, RV or aircraft is no longer of use to you, it
can still go a long way toward supporting the charity of
your choice. Make sure to fill out the forms the charity
representative gives you and have them ready for the driver
when he comes to pick up the car. No need to pay for
advertising, no loss of privacy and possible security risk,
and no need to pay for vehicle registration, insurance, and
repairs to keep your car in running condition while you wait
for a buyer.
Also, if your car is running, consider
dropping it off with the charity yourself to save the
organization from paying for towing costs. For states that
require smog certificates or safety inspection certificates,
you can donate your vehicle without these documents. And
some cars may not qualify for the tax exemption because of
the condition they're in.
There are a few exceptions in the new
tax law regarding the fair market value section, for
example, you may base your deduction on the vehicle's fair
market value if the charity sells it to a needy individual
at a discounted price or if the charity uses the car as part
of its mission instead of selling it. Some charities have
the capability to repair or perform maintenance and get a
donated vehicle ready for sale. A vehicle donation is
allowed if you itemize your income tax
return.
Whether it's the law in your state or
not it's a good idea to protect yourself by having proper
insurance coverage on your vehicle until it's donated. One
of the exceptions to the new IRS regulations allows donors
to still deduct the fair market value of their vehicle,
provided the charity materially improves the
vehicle.
If you donate a car you can get a tax
break and help your community at the same time. Major
charity car donation programs include: Kidney Foundation Car
Donation Program, Target and Goodwill Industries. Whatever
the case, your car donation, like any charitable donation,
will get you a good tax deduction, will go to help someone
in need and it'll make you feel good that you were able to
help in some way.
copyright©2007 J. Johanson All
rights reserved. No permission is given to copy or reprint
this article in any form.
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