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Car Donation Tax Deduction Article
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Old Cars Never Die
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The truth is, even cars go old. Similar to dog years, which is equivalent to around five human years, a car ages considerably faster than its users. A so-called daily driver that has been running for 10 years straight can call himself lucky if his vehicle has not yet been subjected to multiple engine overhauls, ball-joint fixes or even a major washover.
So what do you do with that lumbering jalopy sitting in the garage sucking air? How about making it useful again by donating it to a car donation program? Various charities across the US have been accepting old cars for donation in exchange for tax benefits. Donors receive a tax deduction on their individual tax returns once the donation is certified and approved.
Charities have various options on how they can use the donated vehicle. They can either sell the vehicle in an and the proceeds can be allocated to funds or can be overhauled and improved and used on various functions such as transporting food and other goods to needy areas or any other use approved by the charity law.
Starting Up
Davis Memorial Foundation launched the first successful car donation program in 1978. The Washington-based Davis' motivation was that it wanted to better compete for the limited number of donations in the US.
Davis' program received only five vehicles in its initial year but other charities were enthralled by the concept and they eventually launched their own car donation programs afterwards. Private fundraising organizations and partnered with charities. The private firms took the responsibility logistics and they boosted efficiencies in the program for it to become more effective.
Car donation programs became a new fund generator for the charities and money constantly flowed to support various programs. Some of the well know charities that operate car donation programs include the United Way, the Red Cross, Easter Seals, MADD and Big Brothers/Big Sisters.
The value of your donation
The National Automobile Dealers Association and the Kelly Blue Book offer online resource to help car donors determine the fair market value of their vehicles.
The minimum tax exemption of $500 is given the vehicles deemed "low value". Claims under this category are finished quickly, as the required paperwork is minimal. Donors can also claim as a tax deduction the value of their vehicles sold via auctions if the sale price surpasses $500. However, cars sold in dealerships and auctions are normally bought far below their actual book value.
Vehicles still in good running condition can also be used by the charities for other functions such as delivery of goods to different places, delivering food to the homebound, transporting blind or elderly people to the hospital or even help train students of auto mechanics. Tax benefits from this category can reach as high as $5,000 for the owner.
A win-win situation
Participating in a car donation program is seemingly a no-lose option. The donor can redeem a lucrative tax-benefit by giving away an old car, while a charity receives money that it will not normally get from cash donations. By choosing this program, the donor is sure that the complete value of his donation is helping charity and making a positive impact.
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