Some critics have claimed that car donations are essentially a tax shelter. However, non-profit organizations in the US have come to rely increasingly upon the revenue from car donations. This type of donation has become increasingly widespread; in 2000, 733,000 U.S. taxpayers reduced their taxes by $654 million.
Tax considerations Edit
Although advertised as an easy way to dispose of an old car, donors need to fulfill certain post-donation requirements to qualify for the tax deduction,[1] such as obtaining a written acknowledgment of the car's subsequent sale by the charity,[citation needed] and itemizing tax returns instead of taking the standard deduction.
For vehicles valued at less than $500, the deduction amount comes from the donor's own estimate of the car's value, even if the charity receives less money from its sale. Deductions greater than $500 are limited to the proceeds of selling the vehicle, usually at auction. The U.S Internal Revenue Service advises that starting in 2005:
The rules for determining the amount that a donor may deduct for a charitable contribution of a qualified vehicle, including an automobile, with a claimed value of more than $500 changed at the beginning of 2005 as a result of the American Jobs Creation Act of 2004. In general, that Act limits a donor’s deduction to the amount of the gross proceeds from the charity’s sale of the vehicle.
For vehicles valued at over $500, taxpayers are required to attach the charity's written acknowledgment to their tax return.[2]
In the United Kingdom
Practices
Benefit to charities
References
External links
Tax considerations Edit
Although advertised as an easy way to dispose of an old car, donors need to fulfill certain post-donation requirements to qualify for the tax deduction,[1] such as obtaining a written acknowledgment of the car's subsequent sale by the charity,[citation needed] and itemizing tax returns instead of taking the standard deduction.
For vehicles valued at less than $500, the deduction amount comes from the donor's own estimate of the car's value, even if the charity receives less money from its sale. Deductions greater than $500 are limited to the proceeds of selling the vehicle, usually at auction. The U.S Internal Revenue Service advises that starting in 2005:
The rules for determining the amount that a donor may deduct for a charitable contribution of a qualified vehicle, including an automobile, with a claimed value of more than $500 changed at the beginning of 2005 as a result of the American Jobs Creation Act of 2004. In general, that Act limits a donor’s deduction to the amount of the gross proceeds from the charity’s sale of the vehicle.
For vehicles valued at over $500, taxpayers are required to attach the charity's written acknowledgment to their tax return.[2]
In the United Kingdom
Practices
Benefit to charities
References
External links
