December 31 is the deadline for taxpayers to write off the fair market value of a vehicle donated to charity. Under new legislation effective January 1, taxpayers must use the vehicle’s actually sale price from wholesale auction in deductions for charitable vehicle donations. Legislators changed the law after determining that too many tax payers have taken advantage of the system, overvaluing donated property, specifically vehicles. The revised regulation is expected to reduce deduction amounts by $2.3 billion over the next 10 years. Kelley Blue Book offers a resource to help taxpayers anxious to complete a vehicle donation before Dec. 31. Under the Blue Book’s Private Party Value, would-be donors input the vehicle’s mileage and current condition in the used-vehicle condition quiz to accurately determine a car's fair market value. The printed condition quiz and value report can be attached to the tax return. Kelley Book also suggests the following guidelines in donating vehicles to charity:
Make sure the charity is a recognized and trusted organization. The donor should be familiar with the charity's purpose. Be careful of 'sound-alike' charities. Radio advertising does not mean a charity is legitimate. The Better Business Bureau can help determine if a charity is a recognized organization.
