June 15, 2007, Newsletter Issue #61: When to Deduct a Car's Fair Market Value
Tip of the Week
Donate Car For Charity Tip: When claiming a car donation tax deduction, the IRS lets taxpayers use the vehicle's fair market value, provided certain conditions are met. Taxpayers may want to consult an accountant on car donation IRS rules before claiming a car donation at fair market value. The IRS offers the following guidelines:
* It may allow a tax deduction for the car's fair market value if the recipient organization "makes significant intervening use of the vehicle," or if the recipient makes major improvements to the vehicle.
* The IRS may accept a deduction of fair market value, if the charitable organization gives away the car for free, or sells it at a much lower price, to help "the poor and distressed or underprivileged."
* Finally, the IRS may accept a car donation tax deduction for fair market value if the claimed deduction is $500 or less.
The IRS offers guidance in determining whether you can deduct a car's fair market value when making a car donation to a charity. Call, toll free, 1-800-TAX-FORM, or go online to IRS.gov, then click on the link for Publication 526, "Charitable Deductions."
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