Tax Tips: Don't Give Your Car to Charity

For the last bunch of years I've been seeing all sorts of ads asking people to donate their cars to charity. In one compelling ad they even have a couple discussing how their car served them well for many years and that they would donate it so that it will go to someone who can really use it. Then they also get a tax write off on their tax return.

How WRONG that is.

First off, usually when you donate your nice car for someone else to use it ends up in a scrap yard to be parted out. Actually many people will benefit from it, just not in the way you expected or hoped. So if you love your baby and hope someone will get many more years of service from it, SELL IT. Otherwise it WILL be recycled and end up as a couple refridgerators the next week.

I've been preparing tax returns for the last 10 tax seasons. I've been watching for how these types of charitiable contributions have been handled. The authorities used to just accept whatever people would put on that non-cash line but people were becoming abusive now that giving away cars became more commonplace.

The latest information in the accounting world is saying that the IRS will require even more proof as it plans to disallow more and more of these deductions.

In my opinion the best way to avoid an audit, or exclusion of your write-off is sell the car and donate the money the charity. The check is 100% solid proof you made the contribution.

And you should also consult your accountant before making any big decisions. Did I mention that my office does all states in the United States and prior years? Personal, business, etc. We do it all. Check out the office website:
www.mjlcpa.com
Next they required proof of the value of your vehicle.