New vehicle donation guidleines go into effect in 2005. Consider making a donation of your used
car or truck before the end of 2004 to ensure maximum value to you when file your 2004
taxes. You can make a vehicle donation to AW by visiting our donation page at http://www.americanwhitewater.org/participate.phtml and
selecting "Vehicle Donations".
American Whitewater has partnered with V-DAC, which is a free, convenient service for
converting that extra car, truck, or RV into a tax deductable donation benefiting
American Whitewater Affiliation. You can donate online or call 866-332-1778 to
make your donation.
If you have any questions about donating to AW, please call American Whitewater at 301-589-9453
and ask for Jason Robertson.
The IRS has posted a description of the new 2005 vehicle donation guidelines at http://www.irs.gov/newsroom/article/0,,id=131660,00.html,
which we have reprinted here for your convenience.
IRS Officials Urge Care for Those Making a Car Donation; New Law Changes Rules at End of
the Year
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IR-2004-142, Nov. 30, 2004
WASHINGTON - The Internal Revenue Service issued a consumer alert today to help
taxpayers avoid potential pitfalls when they donate their automobiles to
charities.
In addition, as taxpayers plan their charitable giving, donors should understand
the way that the American Jobs Creation Act of 2004 will alter the rules for the
contribution of used motor vehicles, boats and planes after Dec. 31, 2004.
Next year, if the claimed value of the donated motor vehicle, boat or plane
exceeds $500 and the item is sold by the charitable organization, the taxpayer is
limited to the gross proceeds from the sale.
Under the new rules, the charitable organization must provide an acknowledgement
to the donor within 30 days of the sale stating the amount of gross proceeds.
Alternatively, if the charity significantly uses or materially improves the
vehicles, the charity must certify this intended use and duration and provide an
acknowledgement to the donor within 30 days of the contribution. If the charity
significantly uses or materially improves the vehicle, generally, the donor may
deduct the vehicle's market value.
For the remainder of 2004, however, the new rules do not apply. Under the rules
in effect for 2004, taxpayers will be able to deduct the fair market value of the
contributed property.
"Just because the rules will be tightened for vehicles donated next year doesn't
mean anyone should give a car to charity and claim an inflated value this year,"
said IRS Commissioner Mark W. Everson.
IRS officials recommend that people who want to donate their vehicle by Dec. 31,
2004, take the following steps:
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Check That the Organization is Qualified - Taxpayers should
make certain that they contribute their car to an eligible organization;
otherwise, their donation will not be tax deductible. Taxpayers can use the
IRS Web site to check that an organization is qualified by searching
Publication 78. Publication 78 is an annual, cumulative list of most
organizations that are qualified to receive deductible contributions.
Publication 78 is also available in many public libraries. In addition,
taxpayers can call IRS Tax Exempt/Government Entities Customer Service at
1-877-829-5500. Be sure to have the organization's correct name and its
headquarters location, if possible. Churches, synagogues, temples, mosques
and governments are not required to apply for this exemption in order to be
qualified. They frequently are not listed in Publication 78. Donations
to these institutions are tax deductible.
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Itemize in Order to Benefit - Many taxpayers can't take a
deduction for car donations because they don't itemize deductions on their
personal tax return. For taxpayers, the decision to itemize is
determined by whether their total itemized deductions are greater than the
standard deduction (for 2004, the standard deduction will be $4,850 for
single; $9,700 for married filing jointly). Slightly more than
one-third of the 130 million individual taxpayers itemized in 2001, the last
year for which complete data is available.
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Calculate the Fair Market Value - The donor must take many
factors into consideration to establish the value of the car. Many
used-car buying guides contain step-by-step instructions so that readers can
make adjustments to the value of a car for accessories, mileage and other
indicators of its general condition. Both Publication 526, Charitable
Deductions, and Publication 561, "Determining the Value of Donated
Property," provide detailed instructions.
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Deduct Only the Car's Fair Market Value - Some car donation
program operators have mistakenly claimed that donors can deduct the highest
value listed in a used-car buyer's guide for their make and model of car,
regardless of the donated car's condition. The IRS, however, will only allow
a deduction for the fair market value of the car. Fair market value
takes into account many factors, including the vehicle's condition. The
fair market value of the taxpayer's car may be substantially different than
the highest value listed in a used-car buyer's guide for that make and model
of car.
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Document the Charitable Contribution Deduction - For vehicle
donations, taxpayers must document the car donation and its fair market
value. Recordkeeping requirements are comprehensive and vary depending on the
amount of the contribution and the total amount of the charitable
deduction. IRS Publication 526 details requirements for the types of
receipts taxpayers must obtain and the forms they must file.
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Contact State Charity and IRS Officials When in Doubt -
Donors with questions about whether a contribution is deductible should call
the IRS at 1-800-829-1040 or for TTY/TDD help, call 1-800-829-4059.
They can also find IRS forms and publications at IRS.gov. Donors
concerned that contributions are being solicited for fraudulent purposes
should contact the appropriate state charity official, who is often located
in the state attorney general's office. A list of state charity
official offices can be found online.
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