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Wednesday, 16 September 2015

Donating Used Cars Is Not As Straightforward As It Used To Be

Donating Used Cars Is Not As Straightforward As It Used To Be

Many people have a thorough understanding of how to sell or trade used cars, even if they have never done so themselves. However, the process of donating a vehicle to charity is mostly unknown to most of us. There are many common misunderstandings about the process, which will be cleared up below.

The Truth About Tax Breaks

All over television, billboards, and even on the Internet, there are ads stating that if you donate your used cars to charity, you will receive a tax break. Even though this is technically true, these tax breaks are much smaller than they were in years past. Unfortunately, this is because some people took advantage of the system.

Up until recently, the process was quite easy and straightforward. Taxpayers simply claimed the fair market value of the vehicle on their tax forms. This was easily determined by auto valuation services such as Kelley Blue Book or Edmunds. As a result, many people just donated their used cars to the closest non-profit and simply claimed the applicable tax break.

Then some taxpayers began to claim that their auto donation was worth more than the actual value, so the government was forced to enact strict rules regarding the amounts you could claim subsequent to vehicle donation. Everything now depends on how the charity intends to use the vehicle, which puts taxpayers in an awkward situation. They do not know the exact size of their pending tax deduction at the time that their used cars are donated.

The IRS has a $500 deduction threshold for vehicular gifts. If the auto is valued higher than that, it is valued at the price that the charity eventually sells it for. If the charity decides to use it prior to selling it, you may be entitled to a deduction equal to the full value of the auto if the charity provides you with documentation regarding the sales price and how it was used prior to the sale.

Finding An Appropriate Charity

It is crucial to research your chosen charity before you drop off any used cars. Though there are many philanthropic groups that will gladly accept your donation, only those that are tax-qualified will result in income tax breaks. There are many groups that perform valuable work in the community, but they are not approved charitable organizations in accordance with IRS rules. There are also many con artists around that will take advantage of your good intentions, so always verify that your chosen non-profit is legitimate and reputable.

So, is donating your old automobile the right option for you? Donating a vehicle is a noble undertaking. Though you expect a tax break in the end, you are still doing your part to help your community. Not only will it save you a few bucks at the end of the year, but it will also provide you with a sense of pride, knowing that you did something to help your neighbors and friends in your area.
To learn more about their options for Springfield, IL used cars, residents should visit http://www.freedomautosonline.com/.

Article Source: http://EzineArticles.com/9157012

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