Strategy: Specify that the charity uses your vehicle in furtherance of its tax-exempt purpose. In that way, you can deduct an amount equal to the vehicle’s fair market value (FMV).
On the other hand, if you make no specific provisions and the charity arranges to sell the vehicle,your deduction generally is limited to the sale price.
Here’s the whole story: Prior to 2005, you could deduct a vehicle’s full FMV if you donated it to a qualified charitable organization. But a 2004 tax law—the American Jobs Creation Act—changed the rules. Under the current rules, if the vehicle’s value exceeds $500 and the charitable organization sells it, your deduction is limited to sale price.
However, if the charity materially improves the vehicle (e.g., repairs dents or installs new features)or significantly uses the vehicle and certifies the use, you still can deduct the FMV. In any event, be aware of the following requirements when you donate a vehicle to charity:
- The charity that received the donated car must be a charitable organization qualified to receive deductible contributions.
- The deduction is strictly limited to the vehicle’s FMV. That doesn’t mean the highest value listed in a used-car buyer’s guide for the make and model without regard to other factors such as the vehicle’s condition.
- The donation and the FMV must be properly documented. The record-keeping requirements depend on the value claimed and the total amount of your annual charitable donations.
Like what you've read? ...Republish it and share great business tips!
Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...
We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.
The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.
" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/6138/jump-start-charitable-tax-deductions-for-donated-vehicles "