Wednesday, July 23, 2008

What Happened to the Car Donation Tax Deduction?

In 2005 the tax rules for a vehicle tax donation changed for the worse for may tax payers. In the years before the change, people who donated an automobile to charity were able to get a write off the estimated value of the vehicle based on the vehicle's condition, make, and model.

Things are different now. For a car donation tax deduction to be valid, it is necessary to get a receipt for the actual amount that the charity sold the car for. This is likely causing many people to keep their vehicles for trade in rather than donating the car for a tax benefit. It is unfortunate that charities and tax payers are unable to benefit from the car donation tax deduction like they once were, but just because the IRS reduced the vehicle tax deduction somewhat doesn't mean that tax payers don't have many simple tax saving strategies available to them if they are savvy.

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