The sggng economy hs mny rederng ther chrtble gvng – just when t s needed most. Tough tmes, however, do men you must forego the chrtble seson. f tred of pyng nsurnce nd mntennce on seldom-used vehcle, der dontng t to chrty. t’s gret wy to serve your communty, cut expenses nd, s bonus, reduce your tx bll.

For exmple, der my 1987 Dodge Rm 50, 4WD – let’s cll hm “George” ( the ttle “Communty Eye Sore” my wfe hs bestowed). George runs gret but doesn’t get out much. He spends most of the yer sttng quetly n the drvewy. n wrmer months, brds perch on hs rsed wpers nd bees nest n hs rusted qurter pnels s George dutfully wts the occsonl trp to the hrdwre store or the frst flkes of snow.

Unfortuntely, nsurnce nd mntennce mke the cost of keepng George to upwrds of $1,000 per yer. By dontng George to chrty ’d remove ths nnul expense nd net severl hundred dollrs n tx svngs.

dmttedly, however, George’s ge nd condton my mke hm gret cnddte for donton (Don’t worry George, gong nywhere!). But, f you hve seldom-used vehcle tht s bt newer, your generosty my sve thousnds n txes. For exmple, der the donton of vehcle worth $8,000. The chrty receves relble vehcle to use, sell, or trnsfer to needy ndvdul. You’ll receve the “wrm glow” of gvng nd sve roxmtely $2,000 n federl tx (ssumng you temze deductons nd re n the 25% mrgnl tx rte).

Cre should be tken when clmng deducton for donted vehcle (ncludng bots nd rplnes). Pror to 2005, txpyers could smply clm the vehcle’s fr mrket vlue (FMV) obtned from reference gude such s Kelley Blue Book. Snce 2005 the rules hve become more strct nd complex. The deducton mount llowed (f over $500) depends on how the orgnzton uses the vehcle. The chrty repo ths use to both donor nd the RS v Form 1098-C, Contrbutons of Motor Vehcles, Bots nd rplnes.

Here’s quck rundown of the deducton llowed bsed on the chrty’s use of the vehcle:

Outrght sle by chrty: f the vehcle s sold by the chrty to dsnterested thrd prty, the deducton s lmted to the proceeds from the sle. The chrty repo ths mount on Box 4c of Form 1098-C.

mprovements pror to sle: f the chrty mkes sgnfcnt mprovements to the vehcle (reprs tht substntlly ncrese the vehcle’s vlue), the donor wll be ble to deduct the vehcle’s FMV s of the dte the contrbuton ws mde. The chrty fes the donor nd RS of these mprovements by checkng Box 5 nd descrbng the mprovements n Box 5C on Form 1098-C.

Sle or trnsfer to needy ndvdul: f the chrty sells or gves the vehcle to needy ndvdul the donor wll be ble to deduct the vehcle’s FMV s of the dte the contrbuton ws mde. Ths s true even f the chrty sells the vehcle for less thn ts FMV. The chrty fes the donor nd RS of these mprovements by checkng Box 5B on Form 1098-C.

Sgnfcnt use by chrty: f the chrty retns the vehcle for use n ts chrtble purpose, the donor cn deduct the vehcle’s FMV s of the dte the contrbuton ws mde. The chrty fes the donor nd RS by checkng Box 5 nd descrbng the vehcle’s use n Box 5C on Form 1098-C.

These reportng requrements ly when the vehcle’s “clmed” FMV exceeds $500. f Form 1098-C s receved, the donor cn deduct more thn $500 for the vehcle. f the donor s llowed to deduct the vehcle’s FMV they must be ble to substntte the deducton clmed. They re utomtclly enttled to deduct the hghest vlue lsted n ny vluton gude unless they hve evdence to prove the vehcle’s condton wrrnts ths vlue.

Ths rtcle shres nformton on deductng donted vehcles (ncludng bots nd rplnes) to chrty. There remn, however, mny lmts nd requrements ncluded n ths rtcle. s lwys, plese remember tht ths or ny rtcle does ttute or replce the dvce of qulfed professonl. f you hve ny questons regrdng your chrtble gvng or ny other tx ssue, plese feel to cll our offce t (304) 267-2594 to spek wth tx professonl.

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