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Deductions For Auto Donations After 12/31/04
Currently taxpayers can donate a used vehicle to a charitable organization and receive a tax deduction for the fair market value of the vehicle. The fair market value is determined by the taxpayer. An appraisal is required for donations greater than $5,000.
In 2005 the law changes for donation of a vehicle for which the claimed value is greater than $500. For a taxpayer to claim a donation greater than $500, the organization must provide the donor with the sale price of the vehicle within 30 days of the sale. That sale price is the taxpayer's allowable deduction.
(Note: if the organization uses the vehicle rather than sells it, the taxpayer can deduct the market value.)
Taxpayers could receive the same value by selling the car themselves and donating the cash to charitable organizations. The change in the tax law will eventually stop the practice of donating vehicles to charities.
If you have a used vehicle to donate, you should do so by December 31, 2004.
