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Car donation services are appealing because they benefit good causes, but also because they provide a tax write-off for Americans. But understand that the tax write-off may not be the value donors can get selling their vehicles through classified ads. Why? Because new federal tax laws limit the deductions that taxpayers can claim for their vehicle donations.
Look for car donation services that plan to keep and refurbish donated cars to use in their charitable works. The IRS permits donors to take fair market value for their deduction, when charities use the car donation in their programs.
Chances are, though, that the charity will sell your vehicle or its parts at auction, for a lower price than you can get on the market.
Say you think your donated vehicle is worth $1,200, but it sells at auction for $725. The lower amount is what you are entitled to claim as your tax deduction. Before contacting car donation services, make sure that donating your vehicle is the right choice for you.
|Jennifer Mathes, Ph.D.|