Live in USA
Car donation is the practice of giving away no-longer-wanted automobiles or
other vehicles to charitable organizations. In the United States, these
donations can provide a tax benefit and have become very popular.
Some
critics have claimed that car donations are essentially a tax shelter. However,
non-profit organizations in the US have come to rely increasingly upon the
revenue from car donations. This type of donation has become increasingly
widespread; in 2000, 733,000 U.S. taxpayers reduced their taxes by $654
million.For vehicles valued at less than $500, the deduction amount comes from
the donor's own estimate of the car's value, even if the charity receives less
money from its sale. Deductions greater than $500 are limited to the proceeds of
selling the vehicle, usually at auction.
The U.S Internal Revenue Service
advises that starting in 2005:
The rules for determining the amount that a
donor may deduct for a charitable contribution of a qualified vehicle, including
an automobile, with a claimed value of more than $500 changed at the beginning
of 2005 as a result of the American Jobs Creation Act of 2004. In general, that
Act limits a donor¡¯s deduction to the amount of the gross proceeds from the
charity¡¯s sale of the vehicle.
For vehicles valued at over $500, taxpayers
are required to attach the charity's written acknowledgment to their tax return.
Car donation schemes in the UK are slightly different to those operating in the
United States and only established themselves as a valued source of income for
UK charities in January 2010, led by Giveacar ¨C a non-profit organisation.
Operating as a non-profit organisation allows charities to avoid the large
overheads created by profit-making car donation companies. In addition, whereas
car donation in the US has been incentivised through tax breaks, in the UK there
are no such tax benefits to donating your car.
Many charities run donation
programs. All of them accept car donations, such as Goodwill, Salvation Army and
even the American Cancer Society. Many charities will use your car donation
directly to transport volunteers and supplies to areas that need help. Some even
have their own car lots which sell the donated cars but many have their
donations processed through auto auction companies. Many processing companies
also collect and sell donated cars and distribute the money to a charity the
donor indicates. The processing company typically takes a percentage of the sale
value of the car, but these programs allow charities without their own
facilities or staff dedicated to fund raising to benefit from vehicle donation
programs.
Ideally, donors should also investigate how much money from the
sale of the car goes to the auction processor and how much actually benefits the
charity's programs, as opposed to its administrative overhead.
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