On October 22, 2004 the JOBS bill (HR 4520) was signed into law. Section 731 of this law places new restrictions on car donations to charity. If you are looking for a tax deductible car donation, it is important to note these changes to the tax law that went into effect on January 1st, 2005 to make sure that you will receive the tax benefits that you expect from your car donation.
TITLE VIII: Revenue Provisions - (Sec. 884)
Revises rules for claiming tax deductions for charitable vehicle donations of cars, boats, and aircraft valued over $500. Limits the allowable amount of such deductions to the proceeds received by the charitable organization from the sale of the donated vehicle. Requires the organization to provide donors with a written acknowledgment of the contribution within 30 days of the donation. Imposes a penalty upon donee organizations for providing false or fraudulent acknowledgments.
Tougher Car Donation Tax Laws
To help reduce overvalued car donations, the IRS has issued a new Donor's Guide for Auto Donations - Publication 4303. In addition, the legislation signed into law by President Bush on Oct. 22 makes substantial changes to used-car charitable deductions.
As of January 1, 2005, when a taxpayer donates a vehicle for which the claimed value is $500 or more, the deduction he can claim will depend on how the charity plans to use the vehicle. If the vehicle is sold by the nonprofit, then the taxpayer will be able to deduct only the amount of gross proceeds the organization received from the sale, and the charity is responsible for informing the donor of the donation amount by the individual tax-filing deadline.
If, however, the group plans to use the car for what the law deems as "significant" tax-approved charitable work, the donor would be able to claim the fair market value of the donated vehicle. The new law also provides penalties for fraudulent acknowledgments provided to taxpayers.
For information about determining the "fair market value" of a vehicle you can read Publication 526 - Charitable Contributions. Be sure to read the section entitled "Cars, boats, and aircraft." This gives very specific information about that type of donation.
For further information on several trustworthy Minnesota and national car donation charities, read the following article on Minnesota Car Donation.
1996 Ford Mustang Cobra Convertible 1996 Cobra Convertible Used 46L V8 32V Manual RWD Convertible clean clear title
$5,000.00 (24 Bids)
Time Remaining: 35m
2004 Honda Civic LX Sedan 4 Door 2004 Honda Civic LX Sedan 4 Door 17L + FREE Parts PARTIAL TRADE
Time Remaining: 36m
Buy It Now for only: $4,799.99
Buy It Now
Hey, if you liked our vintage VW cars and buses please give us a 'Like'