How to Get Maximum Tax Benefits Through Car DonationJanuary 29, 2015
In the early days of car donations, a donor would claim the fair market value of their donated car and receive that amount back in tax deductions.
However, since some people would claim false amounts on their tax forms (in an attempt to get better tax breaks), this policy was changed and new laws were set in place.
Now, the amount donors receive as a deduction is a function of both the car’s value and how the recipient charity used that car. If a charity sells the car at auction, the donor will receive whatever amount the car was sold for.
This is unfortunate for donors, as many car donation charities simply sell the cars to the highest bidder at auction, and sometimes for far less than the car’s fair market value.
Vehicles for Change, though, makes necessary repairs and provides the car to someone in the local area who will benefit directly from the donation.
The goal is to provide low-income families with a means to escape poverty without having to pay full price for a car. There are a number of benefits to car ownership for those fighting poverty. One of the biggest is that a car gives access to greater job opportunities.
This allows the family to seek a better living. Getting a car also allows the children to participate in after-school activities they may otherwise have to miss.
When your donated vehicle is awarded to a family, you can deduct the fair market value of the vehicle. The IRS recognizes that it is being used to benefit low-income families and rewards the donor for participating.
To learn more about car donations and how tax deductions are calculated, speak with a tax accountant or Contact Vehicles for Change to learn more. We are here to help you help others.