Disclaimer: Giving Heart of America is not authorized to give tax advice. Nothing we state on this website, in writing, in person, or over the telephone is intended to substitute for the professional advice of your CPA, accountant, or tax advisor. Consult IRS Publication 526 for more information.

• In past years, before the current tax law, it worked like this:
  1. A donor gave their vehicle to any charity.
  2. Usually, the charity immediately sold the vehicle at a wholesale auto acution for much less than it's true value.
  3. The donor could claim the fair market value of the vehicle as a tax deduction.
  4. The donor did not need to "prove" the claimed fair market value for donations valued under $5000.

• Unfortunately, a small minority of taxpayers were overstating the values of vehicles for tax deductibility purposes. As a result, Congress passed the new tax law, HR4520, to eliminate the loophole.

• Under the law, starting January 1, 2005, tax deductions over $500 are limited to the amount actually received by the charity if the vehicle is sold.

• Now, for the first time, the size of your tax deduction is determined by the charity to whom you choose to donate.

• Most charities, unlike Giving Heart of America, still utilize wholesale auctions exclusively, dramatically reducing the tax deduction possibilities for their donors.

• Giving Heart of America maximizes your tax deduction and the amount actually going to charity by the manner in which your donation is sold.

Bottom Line: Your donation is still worth a great deal, often even more under the current tax law. But now, for the first time, the size of your tax deduction is determined by the charity of your choice. The correct choice is critical. (See Tax Deductions.)

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