Car Donation Tax Deductions
There are many nonprofit charitable organizations that accept car donations. Some of the vehicles are broken apart for parts, while some are used as part of a ?wheels to work? program that provides transportation to help people get to work. Other nonprofit organizations will sell your donated car and use the proceeds from the sale of your means to fund important job training and employment programs for people with disabilities and other disadvantaged conditions that keep them from being successful in the workplace.
In the past, you were able to donate a means and receive tax credit for the fair market value of the means you donated. A new law that took effect January 1, 2005 changed the tax deduction course of action to make it harder to claim the complete value of your donated means. Today, the new law states that you will only be able to deduct the proceeds the charity gets from the sale of the car minus the cost of necessary repairs. The charity must provide the donor written acknowledgement of receipt of the means, in addition as the sale price of the means. This could be problematic because the sale price of the car will be considerably less than the true market value of the means. Charitable organizations disapprove of this new law because it will discourage many possible donors, consequently hurt the charity. However, it should not discourage possible donors if the charity is their favorite nonprofit, and they know that they are truly helping people get back on their feet. A tax- deduction is nothing compared to helping someone in need.
The only way to deduct the complete fair market value of your means is if the charity does not sell your donated means. It the charity uses your means for a program like ?wheels to work? and acknowledges your donation in writing, you can claim the complete fair market value.