Next to wanting to contribute to charitable causes, perhaps your biggest motivation to donate your car is the substantial tax break it can give you. Dont be misled by information about your return, because the tax breaks you can get from a car donation may not be as big as you think.
If your car donation is worth more than $500, then you should read Revenue Provisions in Section 884 of Title VIII. This details the new restrictions on car donations value at more than the aforementioned amount.
In a nutshell, the provision caps the allowable amount of tax deductions to the gross proceeds received by the recipient (the charitable organization you donate your car to) from the sale of your donated vehicle. When you donate a vehicle with a claimed value of $500 or more, your tax-deductible amount will depend on how the charity uses the vehicle. For example, if the charity sells the car, then you can only deduct the amount of gross proceeds that the charity received from the sale. On the other hand, if the charity plans to use the car for tax-approved charitable work as approved by the law, you can claim the cars fair market value.
The same law also requires...
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