Auto Donate

2007-09-25 14:12:16

( Charity )



Donating your car is a big help to charitable institutions. The organization utilizes it to support their programs by either selling it or using it as transportation service. The country has quite a number of charity that accepts car donations but be sure to find one that is legitimate and tax-qualified. Otherwise, it won’t fall into the hands of the rightful beneficiaries and you won’t qualify for tax deductions.

To donate autos is not just a generous act for many. With the current government program, it can alleviate tax. You will find the deduction relatively smaller than the car’s value but if you don’t want to deal with the intricacies of improving it to make it sellable and you feel genuinely great in giving, then auto donate is just the best option.

The process used to be clear-cut. Your car is referred to an auto valuation to determine its current market value. When you give it to charity, you can claim your old car’s entire market value. Some taxpayers however, abused this program and caused the tightening of rules involving auto donate. Deduction amounts have been narrowed and were considered based on the claimed value and the way the institution used the vehicle. Should charity decide to sell your vehicle at a low rate, you can only claim for that amount. This and other requirements generated confusion until new rules were set.

In the new auto donate law, a giver can have a fair claim of the old car’s market value through exceptions such as the significant intervening use. For example, the institution first used your car for their transportation needs and later sold it a lower amount, you can claim for the full fair market value provided you have supporting documents that the auto was used indeed for nonprofit services.

There are other things you have to check before donating your car if tax deductions are at the back of your mind. Consider that you have to donate it at the tax year for which your return would be filed and that the deductible would not be over the value of your car.


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