July 11, 2008, Newsletter Issue #112: New Policies for Tax Write-Offs on Vehicle Donations
Tip of the Week
New policies for accepting vehicle donations limit the amount donors can write off on their income taxes. What do these new policies mean for donors who want to give unwanted cars to charity and then take the tax deduction?
If the used vehicle is valued at more than $500, the tax deduction cannot exceed the amount the charity gets reselling the car. The donor will need to rely on the charity for information on how much it got for reselling the car. The donor will need to have that amount in hand when claiming a deduction at tax time. If the charity plans to keep and refurbish the car, the donor is entitled to claim the fair market value.
In both cases, the charity also is required to provide written acknowledgement of the transfer to the donor. The acknowledgement needs to be supplied within 30 days after the vehicle donation.
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