When giving its report on the rise of automobile donation to the Senate Committee on Finance in 2003, the US General Accounting Office (GAO) found quite a bit of discrepancy between the amount of monies claimed as deductions on individual and business returns and the monies reported from actual automobile donation sales by non-profit organizations (NPO). As a result, certain changes were made to the existing tax laws that govern how deductions are claimed from automobile donation.

Though California was the only state that kept track of automobile donation proceeds at the time, it was found that third party organizations handling automobile donation usually took up as much as 70% of the amount received from the original sale of such a vehicle on the wholesale market. The exact amount depending upon the arrangement between the automobile donation organization and the NPO.

In California, third-party agencies that handle automobile donation are beholden to take only a given percentage of the sale, wholesale or not, as overhead expenses, no matter what those expenses actually are. As such, higher prices for vehicles are often achieved in private sales in that state, though such sales often take longer than automobile donation auctions in other states.

When the Finance Committee heard these figures and many more that proved the federal government was bearing the brunt of these donations in the form of donation discrepancy, the process to clear this problem with auto donation deductions was initiated. There’s nothing to get a sub-committee going like an estimated $600 million shortfall in tax revenues.

This is not to say that someone using the blue book value of their car to describe a barely running rust bucket given as a charitable auto donation is setting out to defraud the government, but it certainly has the same effect. In that 2003 GAO report, the majority of tax returns investigated from 2002 showed an average actual donation to the charities of 1-5% of that reported as the original donation on the resultant tax forms largely due to the use of third party auto donation agencies and the use of wholesale and wrecking yard sales.

To this day, a large number of NPOs continue using third-party agents to facilitate auto donation. The lack of communication as to where the actual overhead expenses of the third-party auto donation agents were almost entirely lacking in detail – instead, lumping all expenses under categories such as “towing” or “other.” Indeed, bookkeeping has been a real problem with many of these setups.

In an effort to combat this discrepancy with auto donation, new rules were instated by the IRS that require a statement of monies received from the sale of the car, rather than the “fair market value” of the vehicle for vehicles netting over $5,000. Because of this, many who consider auto donation as a viable source of deduction have grown suspicious of letting third-party agencies handle the auto donation process for them.

For instance, if you have a vehicle with a fair market value of $10,000 and sell it yourself, you’ll net about $10,000. After you pay capital gains and income taxes on that amount, you should still have over $7,000 to donate to the charity of your choice, whether they take auto donations or not. This does depend upon your tax bracket, but that full amount will go to the charity and be legally deductible. A third party may be lucky to get $4,000 at auction and give less than $1,000 to your charity and giving a lower reported value to you.

On the other hand, since rules were tightened in the early ‘aughts by the IRS, vehicle donations of over $500 are officially valued for deduction purposes by their sale amount (usually at wholesale) or by an independent appraisal. In fact, you must provide a copy of such an appraisal if your net auto donation is greater than $5,000. Auto donations with a value of less than $250 are still allowed under the “honor system.”

Regardless of the value of your auto donation, the title must be free and clear. You are also responsible for providing the name and address of the charity, where the actual auto donation occurred (very often your home, if towed), a description of the car or truck and the date when the auto donation took place. If the auto donation is valued there or after the fact at less than $250, you must also have a receipt.

In the 1990s and early ‘aughts, it seemed you couldn’t turn anywhere without seeing an ad or hearing a radio commercial, begging people for vehicle donations. These ads resulted in a massive increase in the number of cars donated per year, but the overall number still wasn’t very high.

According to a General Accounting Office report to the Senate Committee on Finance made in late 2003, the actual number of individuals or small businesses that donated automobiles was less than 800,000. That means that fewer than half a percent of the nearly 200 million Americans who file with the IRS each year had vehicle donations to claim in a given year when the practice was at its height.

This doesn’t count the many who had the right to claim such a deduction for vehicle donations and didn’t bother itemizing their returns. It was estimated that the actual number of donations might be as high as 1 million, or a little over half a percent.

Since 2005, the numbers of vehicle donations have declined with the amount of advertising, but also because the relative benefit to donors has been decreased when the IRS tightened up a loophole that essentially had the federal government subsidizing the used car parts market in the guise of charitable donation.

Today, vehicle donations account for a far lower percentage of tax returns than they did in 2004, though numbers now remain constant, with far fewer discrepancies between the amounts donated to charities thusly and the amount claimed.

That said, there certainly are still opportunities with vehicle donations to claim the full value of your car on the open market – or what the IRS calls the, “fair market value,” of your car. This requires you to find a charitable non-profit organization (NPO) that can use your car directly as part of its charitable mission. This may involve giving it away to a needy family or using it to deliver hot meals.

Of course, given the amount of money spent on advertising, most people don’t realize the donation option that will take their car (often not running) away has become such a difficult prospect. Essentially, most taxpayers who go the option of using a third party agent for their vehicle donations, are limited to a $250 deduction without documentation, and up to $500 without the charitable NPO having to file a Form 8283.

Such a form is sent out after vehicle donations to acknowledge the date, type, actual value to the charity and ultimate use of your gift. This is in addition to the receipt you should get as soon as the title is transferred and the car hauled away.

If you’re able to drive the car or truck to their offices, many charities that have an actual use for your car will accept donations. Otherwise, most third-party agents that facilitate vehicle donations don’t want to assume the liability, preferring instead to tow all vehicles away indiscriminately.

Vehicle donations remain popular in the United States because there is still a potential for a significant tax deduction. However, since 2005 this deduction has been that much more difficult for people making relatively less valuable donations to claim the true “fair market value” for their cars. If one is well-off enough to donate a car that’s worth at least $5,000 in independent appraisal, the way is cleared for this higher rate of deduction.

Choosing a charity that handles vehicle donations independently of for-profit middle-men will allow even smaller donations to retain their full value in deduction form. Were there no tax deductions, it isn’t likely that people would be nearly as interested in charitable donations of cars.

It is uncertain how this is affecting the quality of donated cars, though the quantity certainly has gone down. It is possible that the quality of cars that reach actual poor people who need cars to get to work and day care has actually gone down since there are fewer donated vehicles to choose from, or it may simply be that the quality of donated vehicles has gone up, with those junkers previously sold now going to recycling programs and skirting the donation angle completely.

Not everyone has to take just that which the IRS gives them. Sometimes one can time and value their charitable vehicle donation in such a manner that you actually make out far better after putting your entire taxable income into a lower tax bracket.

Doing so on purpose is generally best attempted upon the advice of a CPA, but if you think you’re close to the edge, you can do some simple calculations to find out how close you are to that lower tax bracket, especially if you’ve been keeping track to make quarterly payments, as many small businesses do. Sometimes it only takes a few thousand dollars to tip the balance in favor of a lower rate, and even a car that isn’t running that well can net at least that much.

In fact, in such a case you can decide whether you need to donate a car that’s in particularly good shape or an older one. To potentially take advantage of a higher rate, it’s best that you donate a car that’s currently running and tagged.

Many actually recommend selling a car first and then donating the proceeds directly to a charity, since you theoretically are able to take the same amount as a deductible that you’d be able to get when actually selling it. However, it’s easier to donate a car for use, especially when the charitable NPO in question is kind enough to take care of all the paperwork for you.

Of course, if you are to sell it yourself, you have more control over the ultimate fate of your vehicle donation that if you simply sent it off with a charity or their third-party agents. In such a case, and most of the time in the case of non-functional or low value cars, the vehicle will simply be sold on the wholesale market to keep costs down make the sale as quickly as possible.

When vehicles are sold at wholesale, it is likely that you’ll only get a small fraction of the vehicle’s true “fair market value.” Instead of having enough for a tax break, you may find yourself, with too small a tax break to be significant as well as without car.

Much is made every April about tax deductions, despite the fact that very few people use itemized deductions to account for donations of physical goods such as clothing, furniture or autos. Tax deduction is further complicated by being discounted from your net income rather than the net tax owed. In essence, this means that an average taxpayer receives about 30% of a given donation in actual tax relief, depending upon their tax bracket.

Though it still represented less than a single percent of actual charitable giving in the United States, boat and auto tax deductions were a growing and very visible component of charitable giving when the General Accounting Office (GAO) issued a report on this topic to the US Senate Committee on Finance in November of 2003. At that time, fewer than 1% of the nearly 200 million tax returns filed in 2002 used an auto for tax deduction purposes.

Despite this relatively small amount of claiming, the GAO theorized that perhaps twice the number (about 700,000) of autos were actually donated. This suggests that after the sale of said autos, tax deduction rules made many of the donations worth reporting.

Often this is the case when people are better served by taking the standard deduction or they simply don’t know how to go about with itemized deductions and don’t have the extra money to hire a professional tax preparation specialist. Even when donating a fairly expensive auto, tax deduction limits that require signed forms (essentially affidavits of fair sale and donation) from the receiving agency may show a far smaller value than you thought the donated vehicle would be worth.

This is especially true of vehicles worth more than $5,000, though even those that net over $250 at auction require an acknowledgement of the donation from the charity in question. Even when as little as $500 is received for an auto, tax deduction requirements require a form (IRS Form 8283, section A) to be filled out, though only the most expensive ones require a signed form from the donation agency.

The disparity between the price listed in such publications as the Kelly Blue Book and the actual sales value of a car is largely dependent upon how the vehicle is sold and by whom. For instance, in 2002, a majority of charitable that accepted donations of vehicles were handled by third-party organization, even if the charity itself handled the initial contact calls. Despite the high value of the auto, tax deductions are limited to the actual value received by the charity, and that can represent a small fraction of the original gift.

That certainly doesn’t mean you can’t make a significant donation with your old auto. Tax deductions are certainly available, and for those who are accustomed to itemizing their deductions, such as small business owners and the self-employed, choosing this route can be both rewarding and profitable.

For instance, you don’t need to rely upon a third-party donation service, such as those who continually advertise in just about every type of media. Indeed, when donating an auto, tax deductions are the same whether you give away the actual car or the money that you receive from its sale. Selling the car yourself may be a bother, but you will reap as much as 20% greater deductions from such a cash gift.

There may also be charitable organizations in your area that have use of a running car. Though a large number of cars donated to charity don’t run well or at all, many do run and can assist low-income families in spread out metropolitan areas that aren’t adequately served by public transit. Such an auto, tax deduction aside, can really make a big difference for a family on the brink of making a living. Your deduction will be higher, and you’ve made a real, tangible difference in someone’s life, assuming you didn’t donate a lemon.

One may also consider donating a car or truck to the local high school (or technical college) shop class, especially if it’s a fine car in need of a lot of work. Even after the cost of materials for the auto, the tax deduction will be far higher when the car is eventually sold since the cost of labour need not be accounted for.

Even though the laws were changed in 2005 to reduce the incidence of perfectly legal “tax fraud,” there are still some situations where you may claim the “fair market value” of your car, truck, boat, RV or trailer when you donate to a legitimate charitable non-profit organization (NPO). However, the rules governing what is “fair market value” have also changed.

Until it was clarified, many people (and paid tax professionals) thought this meant taking the “fair” amount from the Kelley Blue Book (or a similar estimation service), regardless of the actual condition of the vehicle. The IRS had different ideas about just what that was when they wrote the statute, but the wording was less than clear. The fair market value clause cost the IRS an estimated $640 million in 2000.

Also, consider what shape the vehicles donated by middle-class Americans are actually in when their owners finally consider donation. Such vehicles are very often in less than “poor” shape. Many third-party, for-profit companies that acted as agents for charities were taking cars whether they ran or not (and advertising as such). The owner got to avoid a fee at the scrap yard, let someone else pick the car up for free and claim the fair market value as a tax deduction.

However, taking the actual fair market value of your vehicle is where the IRS noted the discrepancy. Not only were the agents skimming as much as 70% of the sale price of each vehicle right off the top in legitimate (though sometimes dramatically padded) “service fees,” but the difference in real worth became apparent at the point of sale. Since most of those cars ended up on the wholesale market, the price difference was even more acute.

Even the “poor” rating in the Blue Book requires a running car. Clearly there was a big difference between what these cars would fetch if someone put an ad in the paper and their fair market value, as someone who’d taken economics classes would understand the term. The laws were changed in 2005 to require a receipt of any gift valued over $250 as well as a written satement of what the car actually sold for (over $500) or what use it was put to. Therefore, if the car is sold as its first use after donation, you will only be able to claim the amount of the sale price that was actually given to the charity.

However, if the vehicle is used, as is, you may deduct the real fair market value – the price you can actually get for the vehicle if you were to go ahead and sell the car yourself. If the car is actually used as a car by a needy individual, your deduction can increase as much as 10-fold versis sold on the wholesale market.

If at any point in the first two years after you donate a car to charity, the car is subsequently sold, the charity will have to send you another receipt (actually a Form 8282) letting you know what happened to the vehicle. You don’t have to change anything on your taxes, whether you’ve filed them yet or not. If it was legitimately used for any length of time, you may claim the fair market value of the car when you donated it.

In fact, to back up your claims and justify the fair market value of your car that you’ve chosen, it is often a good idea to take pictures of the vehicle, inside and out. If the vehicle is valued at over $5,000 you’ll need a independent appraisal (in writing) to confirm your fair market value calculations.

If the car is to be fixed up and sold, you may also claim the actual fair market value of your car, as it was when you owned it, if the vehicle is repaired to such an extent that it may be sold for more. You are still allowed to claim as much as you could have gotten if you’d placed a classified ad.

Though the concept of fair market value does still allow you to claim values that assume perfect selling conditions. However, in the real world, many people price old cars to make them sell quickly, so consider what you could actually get for it if you tried. You can assume a small advertising budget.

Since regulations were changed in 2005 with regards to how you can take deductions from charitable auto donations, the decision to donate an automobile is harder than ever for many people. However, by following a few easy steps in determining how your vehicle is likely to be used, you can get a pretty good idea of how to go about getting the highest possible deduction when you donate.

For starters, you should take into consideration the likely benefit you’d receive when you donate. Even with a higher than average allowable deduction, you could end up not claiming it at all in the end. Claiming charitable deductions has traditionally been thought of as something rich people do because it necessarily means you’ll have to file an itemized return. This can actually mean a higher tax bill for some people.

If you don’t have any other legitimate deductions and are filing as the head of household, it is entirely likely that a standardized deduction will actually be higher unless the car you’re donating is of rather high value. Indeed, itemized deduction tends to benefit the self-employed most prominently since they are very likely to be rolling a sizeable percentage of their income back into the business anyhow (in part, to offset the double taxation that is the trade-off for not having a boss to answer to.)

Before you donate, you will also want to consider your motivations. If there’s no other reason than a tax rebate to motivate you, perhaps donation isn’t for you. The most successful automotive donations are enhanced by the satisfaction that good deeds have been done. If you want to impress someone else, that’s fine, too. However, given the restrictions and flaming hoops you’ll have to jump through when you donate, it’s a good idea to have at least one other compelling reason to donate, even if it’s to get the nagging voice of your spouse out of your ear concerning the car up on blocks in the back yard.

Consider also the condition of the car you plan to donate. Is it running? Would it require thousands of dollars in parts to be made reliable? Does it get much of its value from style rather than substance? Can you actually see a family of four going to the grocery store in it? Do you have another more suitable vehicle to donate? Honest answers are the only worthwhile type.

The practical uses of a car (rather than a sale price) are far more valuable to yourself, your deduction powers and the charity you choose to donate to. As such, charities that use automobiles to help fulfill their mission, such as poverty achievement, schools and organizations that assist the elderly are very often looking for good quality, reliable transportation. When you donate to such an organization, the odds of your car being used rather than sold is very high, providing it’s in good, trustworthy shape.

This means that if you can find an organization to keep from selling your car for two years after taking ownership when you donate, you can take the fair market value as a deduction. This has been severely curbed since the early ‘aughts when the amounts actually given to charities and the amounts claimed as deduction on individual and business returns differed by more than 95% in some cases.

To combat this, if one donates a car that is then sold at wholesale, you can expect a receipt of sale for somewhere between 10 and 15% of the value you could get by conducing the private sale. As such, many car donations that were once conducted for convenience sake have now become regular sales that result (or not) in cash donations.

It would also be wise to consider just how you’ll miss the car you inetend to donate. In an effort to avoid regret later on, you may find yourself getting rid of the other car if you’re very attached to that old one. Also, since older cars are more likely to appreciate when you sell after even just a year or two of ownership, depending upon the collectibles market.

Choose the right car and enjoy the maximum benefit when you donate.

While a bevy of advertisements encouraging car donation to charity would lead one to believe that such donations are a major force behind fundraising for legitimate charities and non-profit organizations (NPOs), most charities are far more reliant upon more traditional methods of giving. Non-cash donations continue to be dominated by donations of household goods to thrift stores and stock donations than vehicle donations.

When contemplating a car donation to charity, one should consider just how the charity or NPO in question could actually use the donation of a vehicle. Just as there are now restrictions of usefulness on what one can claim from household object donations, a car that runs (or can at least be repaired without major capital investment) is far more valuable to a charity that can actually use the car directly to further their charitable mission.

Consider a charity that employs a third party, for-profit organization to facilitiate all car donations to charity. After their cut is taken, there is sometimes very little left over to actually be donated to the charity in question. Moreover, if you give a car that is only fit for scrap, the invoice statement you’ll be given as a guide to your actual deduction benefit will reflect this.

Usually the value is far higher for a running car in terms of total money produced by the sale of your car as well the percentage of that the charity is able to keep from said sale. This means more money to reduce your net taxable income, too. Cosmetic damages are usually unimportant to a NPO or charity that is primarily concerned with the functionality of non-cash automotive donations.

Because many of the third-party agents that handle car donations to charity have turned their attentions elsewhere since 2005, there are many NPOs that formerly took auto donations but are no longer accepting them because of all the bother associated with running such a program themselves.

Sometimes, this is simply because the agency lacks a tow truck of its own to pick up cars. Whether they’re running or not, vehicles are almost always towed away to avoid liability issues. As such, this type of car donation to charity, even if the tow truck in question is not in the best shape ever, can be incredibly useful as well as being a high-ticket item for deduction purposes. Not only will you be able to claim a highly useful fair market value deduction, but you’ll also help the charity or NPO collect a lot more money and automobiles in useful car donations that they may have otherwise had to pass on.

Of course, another way to maximize your donation dollars is to make sure you have a free and clear title that can be easily transferred without making staff members of the non-profit jump through proverbial flaming hoops at the department of motor vehicle office. Often people remove the existing license plates and leave the title inside the glove-box for the towing company to find. This allows you to make sure that you’re not held liable for any of the traffic violations a teenage Meals on Wheels volunteer may commit with your former car. Donations to charity don’t need to put you in a vulnerable position!

Overall, the reliance of most NPOs on car donations to charity has remained somewhat low. This is true of most charitable organizations with the exception of those that specialize in giving cars away to needy folks who require reliable transportation. Even if they sell them at a discounted rate, such charities are especially valuable to donors as well as the populations they serve.

If your car is still running, even if it has become ugly, is of great use to many of the organizations that still accept car donations to charity. Choose wisely to make sure your car is put to the best possible use. If your car is fit for little else than scrap, donating it to a charity that requires running vehicles may not be much of a useful donation at all.

When you’ve got an extra car or truck lying about with nothing to do, perhaps you can assist a veteran and her or his family through the Purple Heart Car Donation Program. Especially in a time of apparently unending war, it is easy to make the case that every American owes a veteran and most especially those who’ve been injured in the line of duty.

One could also make the argument that programs such as the Purple Heart Car Donation Program are necessary because federal officials aren’t doing a very good job of taking care of the veterans that it keeps pledging to do a better job of fixing up. However, veterans groups have rarely felt very well taken care of, so the need for charitable programs has always been a part of veteran life.

Given how the cost of insurance (that veterans are not automatically entitled to) keeps going up for veterans and everyone else, it’s no wonder that there is so much work to be done by the Purple Heart Car Donation Program and other veterans’ groups. Indeed, the amount of money paid for the demonstrably sub-standard care given at some Veterans’ Administration (VA) hospitals, has been something of a national scandal since the first Gulf War in the early 1990s.

So, it may surprise you that an old car or truck may be donated to the Purple Heart Car Donation Program without even leaving your pajamas. From their website, you may fill in all the pertinent information that will allow someone to call and arrange a time for pickup

The Purple Heart Car Donation Program differs from many programs in that it doesn’t necessarily just sell your vehicle on the open, wholesale market as many online donation services do. In this case, they run their own, non-profit pick up, delivery and repair services. Also, unlike many other services, you’re allowed to drive your running car up to their offices for donation.

There are many good, charitable outreach missions supported by proceeds generated from the Purple Heart Car Donation Program. For instance, some of the better cars are used to assist veterans in getting to their medical appointments. Sometimes monies are used to help families get on their feet during war time, or to even help purchase a prosthetic limb better than the most basic models that are covered by veterans’ insurance, despite the high fees charged for such coverage.

That organizations such as the Purple Heart Car Donation Program are even necessary is a surprise to many who have, perhaps rightly, assumed that the federal government was indebted to soldiers wounded in the line of duty. However, the sad fact is that once a medal has been awarded, injuries that may have changed a soldier’s entire way of life are not considered the government’s problem once the soldier has been discharged.

Consider the recent increases in massive head injuries during the second Gulf Wars. Though bake sales and fund raisers across the country have been trying to send after-market head protection to soldiers serving, it would seem that money that should be spent keeping people safe is being diverted. The Purple Heart Car Donation Program isn’t currently sending body armor to Iraq and Afghanistan, it does support medical testing and helping veterans afford their medications.

That said, the prognosis for those with brain injuries isn’t very good. For this reason, charities such as Purple Heart Car Donation Program have been stepping in and giving the young spouses of severely injured veterans the skills to help care for them when the VA can’t.

It is also notable that though the current Gulf Wars have not had a very high mortality rate, by the usual accounting, the flip side of that is a very high proportion of troops that have been injured in the line of duty – many of them to be sent back into action. Though the Purple Heart Car Donation Program is only a drop in this bucket, the lives it has touched have keenly felt its presence.

Perhaps the most personally rewarding sort of car donations involves giving your old ride to the local high school for use in their shop class. High schools are considered valid charitable organizations according to the IRS, as are colleges and adult training programs that fulfill a charitable mission.

Since the tax laws regarding car donations were changed in 2005 to stem the tide of fraudulent deductions that were uncovered by several independent reporters and the US General Accounting Office in 2002-3, choosing to make car donations to charities that will fix up the car and put it to good use will help you get the full fair market value for your car in the form of a legal deduction.

Most high schools have a shop program, just as most schools have a budget shortfall these days. Just after music and arts programs, the mechanical arts programs are very often among those programs on the chopping block when budget time rolls around. A healthy stream of car donations to such programs not only emphasizes the need for such training, but can also become a valuable revenue source for the schools in question, making shop classes that much more difficult to cut or limit.

Moreover, the proceeds from the sale of newly renovated car donations can benefit other programs such as arts and music. Even if the purpose of such proceeds are turned right back into trips to the Corvette Hall of Fame for shop class students, a valuable message is sent to those students that their services will be required upon graduation, so perhaps they ought to pay attention.

Indeed, there’s nothing quite like seeing your old jalopy being used to haul a float in the homecoming parade. You can watch it drive by with the satisfaction that money from your car donations is staying in the local community and going to benefit people whose training your town will rely upon for years to come.

Of course, there are limits to just how junky the automobiles used for car donations can be while remaining useful training. Particularly if there are very expensive parts that need to be ordered and can’t simply be repaired. In this case, the school might find itself spending more on parts than the car is likely to get when it’s eventually sold.

It is this sale price that drives the ultimate financial value of car donations as far as the donor is concerned. One of the most important aspects of such ar donations is the amount of deduction that can be claimed. Though you should get a receipt of transfer as soon as a vehicle is donated to the school, the ultimate value will be determined by the final sale price of the vehicle.

This represents your fair market value of the donated car and is often quite a bit higher than if you tried to sell the car yourself without making repairs or if a charitable organization simply sold the vehicle on the open, wholesale market. Even if the car is eventually given away or used to transport the girl’s softball team to away games, such car donations may still be deducted at the fair market value according to publications such as the Kelly Blue Book.

There may be other restrictions. For instance, some high schools stipulate that only car donatations of US manufacture are suitable for their students to work on. This isn’t necessarily a type of bias – they may simply not have metric standardized tools to do the work on foreign autos. If you do have the proper tools to work on your oddball car, you might want to consider throwing those in with any such car donations, to sweeten the deal.

Especially in demand are older or classic cars that have plenty of room and require body work. Vehicles that allow for a mechanical tune up without special diagnostic equipment are also highly prized car donations. Taking all these variables into consideration, your old vehicle might be the very thing for your local high school to refurbish into the lean, mean, driving machine you fell in love with in the first place. Having a plaque on the wall with your name on it isn’t a bad incentive either.

Since the revamping of the laws regarding vehicle donation, automobiles that are not running have been donated at a somewhat lower rate than they were just a few years ago, but that doesn’t mean you’re stuck with that jalopy. You can still donate it to charity even if the tax deduction benefit has been slashed dramatically.

Generally when you donate an automobile that doesn’t run, it will be towed away and sold essentially as a parts car. Though most donated automobiles in such condition are dealt with by a third-party (usually a for-profit company) agent rather than the charity itself, you can still get the old hulk hauled away.

However, you should be aware that the deduction value you may claim for a car sold on the wholesale market is greatly limited by the fractional amount it is likely to be sold for as well as the overhead fees that are taken off the top by a third-party agent, the remaining value that is actually given to the charity from the sale of the donated automobile is the extent of what can be written off under the new laws.

Generally, the highest values for donated automobiles are reserved for cars and trucks that are still running, some agencies will accept some broken down cars and trucks for repair. If you can find a school or church that has an ongoing mission of automotive training, even a non-functional auto has the potential to be deducted at the higher “fair market value” in such cases.

When you donate an automobile to a charity or non-profit organization recognized by the IRS as a charitable organization, it won’t be your job to part it out and sell the pieces. Someone will do that for you after they purchase the whole thing, parts and all. On the other hand, if you don’t have all the parts anymore, as long as it still looks something like a whole automobile, you’ll be able to give it away as such. No one is going to be counting each and every bolt to make sure it’s still there, nor do you have to sign any sort of affidavit that your donated automobile is repairable.

So, reagardless of how profoundly it’s not running, donated automobiles are still accepted by a wide range of charitable organizations. Often, they will be larger or national charities that don’t have a specific mission involving getting running cars to people. Unless there’s something particularly cool or somehow unique about your donated automobile that would make it a good project car, you can assume that it will be sold for scrap or parts at a wholesale auction.

If the donated automobile is special, you might want to shop around and find someone who will take the time to put it back into working order. Schools that teach shop classes and other non-profits with an educational mission are the most likely to want to put the time and effort into getting your mangled ‘65 Thunderbird into saleable condition. Though it could take some looking on your part, there are charities available who will come and pick such a donated automobile away.

This approach has the added advantage of providing you with the opportunity for a higher resale and thus, tax deductible value. Of course, it will take a little longer, and you may end up waiting a few months before you finally get the paperwork declaring what your donated automobile was sold for – or the use it was finally put to – within 30 days of the final sale or determination.

Donated automobiles, regardless of how long it takes them to actually find their ultimate end, will be given a receipt of intent when they’re picked up. This means that even if it takes awhile for the donated automobile to become a running machine again, you have the ability to go ahead and file your taxes for the year in which the donation process was initiated.

Despite changes to the law, there are still plenty of places that accept donated automobile that are no longer running. The only thing you need to consider is whether or not it has potential to be fixed up for sale as a running machine.