The New Tax Rules On Giving Your Car For Charitable Purpose

Making charitable contributions benefits you in two ways. One it gives you a warm feeling of helping out your fellow man, and simultaneously it is also a good way to get some tax reduced. Donating your car to charity will help you to achieve both the benefits provided that you need to be cautious as there are charities that will tell you what you want to hear, which can cause problems for you when you try to claim your donation. Therefore it is very essential for you to know the new tax rules for vehicle contributions to charity implemented by IRS so that you are safe from liability issues. Make sure not to give ear to any rumors by car donation sales claiming higher tax deductions than the IRS allows.

Before you get completely involved in the process of charity you need to exercise on some important facts which play a vital role in the whole process of donating and charity. First of all, make sure that the charitable organization is qualified and if it is not so then you will not be able to claim the deduction on your donation. Another question you will need answered before you donate your vehicle to charity is the utilization of the vehicle and if you believe that your purpose is not fulfilled then you can look for another charitable institution that will use the vehicle according to your approval. Keep yourself always fed with the new tax regulations before you donate your car to a non-profit organization.

According to new tax rules you can no longer claim the blue book value of the car instead the amount you can deduct is the exact value the charity receives when it resells your donated vehicle. The original value of your donated car bothers the IRS and not value that stands after your car has been repaired. The IRS provides other rules of thumb on car donations for example: many non-profit organizations use a third-party to administer the service of reselling your donated car. That third-party would not give you a free service instead 20% or more are charges as their administrative fees that depends on the resource obtained after selling the car at auction that further lowers the value of your tax deduction because the net amount the charity receives has been reduced.

Therefore it is important for you to be proactive before you make a donation than after. Make sure to remove the plates and all other personal items from your vehicle and file your tax receipt with your tax records if you decide to donate.

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