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Under new car donation IRS rules, you can only deduct up to the value for which a charity sells the donated vehicle, unless the charity keeps and uses the vehicle, or makes material improvements to the vehicle before selling it. Find out whether the charity will be retaining and using the vehicle, or making improvements to the vehicle before re-selling it. If so, use fair market value. If not, then the charity will provide you with and accounting of the price at which it sold the vehicle, and you can deduct that amount from your annual federal taxes.
Unfortunately people are finding out that their charities are selling their donated car which is worth thousands of dollars and only getting to deduct $500. I think the charities could do a better job selling the vehicles. Whoever is buying these cars is making more money than the charities!
|Jennifer Mathes, Ph.D.|