Handing over car keysEnlarge Photo
In case you hadn't noticed, it's December 30. Many of you still face mounds of used wrapping paper and guest rooms that need a thorough cleaning, but you should also give a little bit of attention to your personal taxes -- especially if you've come out ahead this year.
On the whole, 2013 has been a banner year for stocks, with the Dow finishing December in record-high territory. Not surprisingly, many traders have taken advantage of surging prices by selling off shares. If you're one of those folks and you're looking for ways to offset capital gains, you might consider donating your car to charity.
We've covered the ins and outs of making an auto donation several times -- and we've even told you about a 2004 law that made giving vehicles to nonprofits less advantageous for tax purposes -- but the folks at the National Kidney Foundation have a few more pointers to share. As the operators of America's oldest auto donation program, Kidney Cars, they know a thing or two about the process.
For starters, remember that if you want to claim a deduction for your gift, your car has to be of some value to the charitable organization. That's not too hard: even nonprofits that don't regularly deal in auto sales can usually manage to put a vehicle on eBay or Craigslist.
The problem arises when donors try to unload vehicles that require extensive overhauls and/or towing. Your 1986 Ford Mustang may have lots of sentimental value, but if it won't run, and if the recipient organization can't come get it, it's a losing proposition for the nonprofit.
Which brings up another point: remember that many nonprofits work with small budgets and are chronically understaffed. If you're going to offer an organization the opportunity to make some money from your gift, be willing to understand the nonprofit's limitations. If, for example, the company doesn't own a tow truck or have an arrangement with a towing service, giving them a vehicle that they have to haul off your property simply creates more work for them, with little or no gain. In such cases, you're better off selling it for scrap.
And of course, remember that for tax purposes, you can only deduct the sale price of your donated vehicle. The fair market value may be $5,000, but if someone picks up your car for $1,500 at auction, $1,500 is all you can claim.
The exception is when a vehicle sells for less than $500. In that case, you can take the fair market value or the sale price, whichever is smaller. (Which basically means that you can only take the fair market value if it's lower than the sale price, and why you'd want to do that is beyond us.)
Have you donated a vehicle to charity before? Was it a good experience? Would you do things differently if you could go through the process again? Let us know in an email, or leave a note in the comments below.