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Someone told me you get $500 in tax return if you donate your car to charity. I live in California so another state could be different.
thetreeoflife.org
Back in WI they changed the law so you could deduct the amount of what the car was sold for by the charity; it used to be you could deduct it's book value. I don't know if that was a state change or federal
It depends on your income and the value of your car. If you have to pay the alternative minimum tax, you may not get any deductions for anything. There are too many variables, but I think we can safely tell you that you will get a deduction between $0 and $100,000. If your car is worth more than $5,000 it has to be appraised. They days of donating a junker and claiming a $20,000 deduction are long gone.
Unless you are currently able to claim beyond the standard deduction, donation of a car won't help at all.
Right.
Unless I'm completely missing something regarding state laws, this will go down in the Itemized Deduction just like any other charitable giving. And as with other charitable deductions, only a percentage of it (based on AGI) will be allowed.
OP needs to donate the car because he/she wants to, and feels it's the right thing. The tax benefit will be negligible.
I also read or heard (ironically if I heard it on the radio, must have been NPR) that claiming a car donation raises a flag and increases your chance of being audited.
Frequently older cars in California, that are difficult or impossible to get past smog, can be sold into Eastern Oregon or Eastern Washington where we don't have to mess with smog...might be a better recovery of your cost in the car compared to donating it in CA (where it would continue to have little or no value as a usable car)
I used to work with a 501(3)c charitable organization, had 4 good years and then the law changed, it was tax law so must be federal, and as one poster noted, the amount claimed for donation could only be what the charity actually received for the vehicle, usually at auction, instead of blue book value as previously. The director of the program told me people with late model vehicles involved in totals would buy the vehicle back from ins. companies for (I think) standard 25% of the value, then donate it to a charity and deduct 100% of blue book. I don't know how it actually affected their taxes; he claimed that was the impetus behind changing the tax law.
If you want to donate your car, do so because of the good it will do other people. If you are primarily interested in the money, then sell it yourself for whatever you can get.
To expand a little, I donated my "island car" to a recognized charity in the early 90s (in Hawaii). That year, I expected to itemize since I was moonlighting and had also moonlighted in NYC during the same tax year prior to moving. I purchased a junker for beach runs and to leave at the trail heads. Well, it was a total lemon of a junker and beyond my ability to fix. I got a receipt for the donation at the book value of the car had it been in decent condition. Later I got tickets mailed to me for "an abandoned car" with impound and towing fees. I had counted on the charity to close out the title and put it in their name as promised in the "we'll pick it up free" agreement. Well I showed the receipt and the agreement to the cops and got off. Turns out the police said they were just selling the cars and not doing the proper title paperwork on time (or on Hawaiian time). Some dude purchased it, broke down and abandoned it. So, to make a long story longer, the next car I had that was driven into the ground and not worth much was sold to a guy who wanted to fix it up rather than donated.
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