Automobile Donation
Thinking about donating your car to charity? Think about acting quickly,
because the tax laws affecting automobile
donation will change on January 1, 2005 ... and they won't change
for the better. Once the new law goes into effect, you will not be allowed
to write off your donated vehicle's Fair Market Value. Instead, you will
only be able to write off the donated vehicle's actual sale price at wholesale
auction. These changes could cost you hundreds or thousands of dollars.
The ever-marvelous Kelley Blue Book has published six tips to safeguard
your interests and maximize the write-off on your donated automobile.
If you've considered automobile donation as a good way to get rid of an
old clunker while doing some charitable good, read on ...
Sage Advice for Auto Donation from KBB
- Donate your vehicle before December 31, 2004.
Tax law changes Jan 1, 2005. To write-off the vehicle's Fair Market
Value, donate your vehicle by December 31, 2004.
- Determine the Fair Market Value of your Vehicle.
The most accurate determination of Fair Market Value is Kelley Blue
Book's PRIVATE PARTY Value and Condition Quiz. Do not use the Kelley
Blue Book Used Retail Value. Do not use the value of a vehicle like
yours from classifieds or pricing sites that don't make adjustments
for mileage and condition. Assess 'your' car's exact mileage and condition
to avoid an audit. Your vehicle's mileage and current condition can
affect its value by thousands of dollars. Print the Condition Quiz and
Value report for your tax return.
- Make sure the charity is a name you recognize and trust.
Be careful of 'sound-alike' charities. Just because you've heard an
ad on the radio for a charity does not mean it is legitimate. Call the
Better Business Bureau to determine if the charity you have chosen is
a recognized organization.
- Ask how much money the charity receives.
According to a government report, more than $34 million was donated
in automobile revenue in 2000, however, only 32% of the gross revenue
was returned to the charity. To work with charities that receive the
maximum amount of return, visit http://www.auto-donation.com.
- Sign the title over directly to the charity or their agent.
Don't leave the title blank under any circumstances. Many illegitimate
charities ask that the title be left blank. This practice may leave
you liable for the vehicle months after it has been donated.
- Get a receipt.
When you make any non-cash contributions, you must get a receipt from
the charitable organization including the name of the charity, their
tax ID, date, location of the contribution. Keep the receipt to justify
your deduction.
Our 180K Civic is still sitting in driveway, collecting a lot of
dust and a little bit of rust. It's not running at the moment, but
I don't think it will take much effort to resurrect it. Whether we
donate the car to charity or bring it back to life as a winter driver,
I need to do something soon before the weather turns really cold and
the tax laws change ...