Do Non-Profits Operate Above the Law?

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Tax laws are characteristically tough, and the penalties for messing up those laws have become more strict over time. The companies and executives who try to get around tax laws have found that the federal government is more likely to make an example out of them than they are to apply mercy to their case. With that said, there are some organizations that operate with a little bit more freedom under the tax law.

Non-profit organizations like Goodwill Industries have special exemptions that allow them to do their business without too much government interference. The unique thing about this situation is that the government looks upon charity organizations with quite a positive eye. This spills over, in many cases, to the people who make the donations that allow organizations like these to prosper. One of the ways that people have been helping out charities in recent years is through auto donation. Vehicle donation is a quick and easy way to give the charity a lot of value. Like the charities have been known to say, one huge donation is just as good as hundreds of small ones.

If you want to donate your car to charity, know first that a bunch of them will take the car off of your hands. They have streamlined the process by which they gather vehicles and further, they have become very efficient at selling them. Because people are more likely to provide a good offer to a charitable organization, you will get more tax value out of your vehicle when someone like Goodwill Industries sells it for you. The fact of the matter is that auto donation is a fast growing way to accomplish a couple of important goals. In addition to getting the important government help, you can rest easy knowing that you have helped individuals that are in great need.

Can You Get Anything for Scrap Car Metal?

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Much has been made of the process by which people gain tax exemptions through their vehicle donation to certain charities. In fact, charities of all kinds take in these vehicles and then sell them off for valuable funds that can be used in other ventures. Lots of folks know that you can donate your car to Goodwill Industries, helping the greater good and gaining an important tax break in the process. What people don’t understand a lot of times though, is that you can get similar tax exemptions based upon scrap car metal.

While the price of vehicles has gone down as the economy has hit a slide, the price of scrap metal has held steady. This is why lots of generous people donate auto parts instead of simply donating a slightly used car. They have a car sitting around their yard or in an empty lot and they understand that by selling it for the scrap metal, they can get unique and sustainable value. This is another option that I might have if I wanted to donate my car to charity.

The fact of the matter is that there are lots of little ways to save money and get ahead when the economy is clearly headed down. People don’t like to look for these things, and in the end they miss out on valuable tax breaks like the one mentioned here. Scrap metal is not as valuable as a new or used car to be certain, but there is still a lot of value that you can get out of the old clunker sitting in your yard. The best thing is that when you donate a car, you are helping out people that are less fortunate than you, as well. This, in turn, creates something of a win-win situation.

Is Government Intervention Needed with Vehicle Donation?

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In 2004, the federal government stepped in and changed the way they looked at charitable vehicle donation. For the longest time, if you wanted to donate a car to charity, you did not have a whole lot of trouble getting around the rules of tax exemption. The problem was that people were taking advantage of auto donation in a way that only American philanthropists can do. Unfortunately, that led to a step up in government regulation, a move that has had varying impact on charities like Goodwill Industries.

So that brings us to the burning question: Was it necessary for the government to intervene here in an effort to regulate car donation even further? If I want to donate my car to charity, there are now quite a few different hoops that I have to jump through. All of this paperwork and the added regulations on auto donation have made it so that many individuals don’t think the effort is nearly worth the trouble they have to endure. The fact of the matter is that something had to be done about people taking advantage of the system, but completely eliminating Kelley Blue Book values from the equation was something that might have been a little bit extreme.

Still, if you want to donate your car to charity, you can get some good value for it. This is especially true for people who donate cars that are in better condition. The problem, of course, is that you are going to be depending upon the charity itself to do the selling for you. That makes it incredibly important for you to find a charity that has a good track record of getting the most value out of their donated vehicles. Government intervention has made this a necessity of sorts, and it’s not too much of a hassle in reality.

What Does The New Vehicle Market Mean for Charities?

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Unless you have been hiding under a rock during the last few months, you know all about the current financial situation. The economy is hurting and people are just not spending the way that they used to. In addition to this situation hurting things like small businesses, retail stores, and the housing market, it has also had an impact on the vehicle market. To be specific, it has impacted the market value of many cars, as people just do not have the money to spend on cars that they used to have.

You might not realize it, but this has had an impact on charities, as well. The down economy has caused organizations like Goodwill Industries to consider some alternative measures, as their auto donations and other staple operations have seen a dip. The reason for this is that when you donate your car to charity in this climate, you don’t get nearly as much tax relief as you would in the past. Because vehicle donation is now so highly regulated based upon correct market value, people just don’t have the freedom to report on their taxes that they used to have.

The charities are emphasizing that auto donation still has an important place for both consumers and for the organizations. They need the cars in order to do their good works in the community and people are still in need of the all important tax breaks that go along with the car donation. If I was thinking I wanted to donate my car in this climate, I would certainly consider all of the options. The fact remains that there are few ways better than this to get a break on your taxes, though. The deduction can help you, even when the economy is struggling, so car donation is something worth considering.

Down Economy Having an Impact on Charities, Too

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If you thought that only the for-profit companies were taking a hit with the down economy, think again. While it is pretty much common knowledge that people are cutting down on their frivolous and not so frivolous spending in light of the current financial landscape, it is less publicized that people are also doing less in the way of donations. In the past, charities like Goodwill Industries have leaned upon both small and large donations to do their work. Specifically, auto donations have paced their effort.

People have always been more likely to donate a car to charity when the economy was going well. Most individuals are more inclined to look at the short term picture, which promotes the idea of holding onto your resources and protecting your property. The truth of the matter is that if you want to donate your car, the benefits of that can be even more important when the economy is struggling. Even when things are not going well out in the business world, the government is still going to ask for their money. With auto donation, you can take a little bit of the load off of your taxes.

This is the message that the non-profit corporations are trying to get across to people out there. Just because the economy is bad does not mean that you have to cut out philanthropy. Specifically, vehicle donation can be a really good thing to do when things get tight. After all, you are not going to be able to sell the car for as much on the open market and it doesn’t do much good sitting around in your garage. If a charity can use it and you can benefit from the government tax relief, then there is no reason why you should neglect to donate your car.

Nonprofits Worry about Car Donation Laws

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Individuals who make the selfless choice to donate a vehicle to a charity are now subject to some important laws. Among those, the government has made it so that auto donations are much more highly regulated and scrutinized. In the past, if I wanted to donate my car to charity, I would be able to do so and claim a certain tax break on my return without much problem. These days, car donation comes with the responsibility of accurate reporting and requires a good bit from both sides of the donation.

Some charities are worried about how the new laws will impact their ability to help people through the sale of these cars. Some of the largest non-profit organizations in America, like Goodwill Industries, have benefitted greatly from auto donations. Typically people who donate used cars or donate used car parts have been able to take advantage of the government’s encouraging philosophies on philanthropy. Though the federal government still encourages people to donate a car to charity, they are tightening up the loopholes so that charities and individuals alike will have to keep better tabs on the transaction.

For charities, the primary worry is that people are going to cut back on their vehicle donations because they won’t benefit as much on their tax return. Though the charities understand that people are typically giving their cars out of the goodness of their hearts, the tax breaks have always played a huge role in encouraging people to unload their auto in this way. The new laws, coupled with the struggling state of the American economy, have had some impact on car donations. The charities depend greatly upon these large donations to do their work, and with more and more people choosing to go in another direction, there is a great deal of concern among those who run the charity organizations.

Claiming Tax Deductions for Charity Donations

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When you choose to make any sort of donation to your favorite charity, you are entitled to quite a bit of tax relief. Though most philanthropists have no desire to receive anything for their good will, the government has decided that charity efforts are worth recognizing. With that in mind, you do need to know a little bit about how to claim these deductions on your tax return. As with most things relating to saving money, you will have to do a little bit of work in order to ensure that your deductions are claimed correctly.

It does not matter if you are making a big donation or a small one. It doesn’t matter if you’re giving to Goodwill Industries, or some other organization. Whatever the case, your donations can be itemized on your tax return using Form 1040, under Schedule A. If you donate a car to charity, for instance, you will be able to claim a huge amount of tax relief under your forms. Auto donations are the best way to really get a good start on your tax deductions. You benefit from getting the market value for that car, while not having to actually do the work of selling your car.

There is no reason, in all honesty, for you to have a car sitting around the house. With vehicle donations being such an easy and beneficial solution, I would donate my car to charity 10 times out of 10 before I allow it to kill the grass on my lawn. It is just important that you take the time to handle your vehicle donation correctly by filing and listing it with the government agencies. Otherwise, you won’t get the credit that you deserve and you will end up giving more money to the government than is necessary.

Benefits of Charity Car Donation

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When most of us think about charity and our donations, we don’t like to think about what kind of benefits they could have for us. After all, the entire idea behind philanthropy is to give selflessly, without having to worry about what we get in return. The thing is, with certain donations, you can actually take advantage of a very important tax write-off. This is especially true if you choose to donate your car. Car donation laws make it so that you are able to attain certain tax advantages as a product of your generosity.

When you donate a car to charity, you can claim the value of that car on your taxes. Recently, there has been something of a crack down on this because some people were using their car donation to lie on their tax returns. You are allowed to write off only the actual market value of the vehicle when you make a vehicle donation. If I were to donate my car to charity, I would need to find out exactly how much a person would expect to be able to buy that car for on the open market. There are certain ways to figure this out, and it’s very important.

All sorts of charities are taking auto donations, including Goodwill Industries. These places can use your old car for the purposes of helping less fortunate people in your community. You will benefit greatly when you donate a used car if the charity you donate to is able to sell your vehicle for a good price. You will benefit greatly if they are able to attain a price higher than typical market value, as that will be reflected as the value on your tax return. You must make sure, however, that they are planning on selling the vehicle for at least market value, though, as a lower figure will cost you potential tax savings.

Charities That Accept Car Donations

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Many of the large charities out there are looking for all sorts of items, and some of the items they are seeking might be pieces of property that would not normally come to mind. When thinking about Goodwill Industries, small donations and the goods that you can see at their respective thrift stores probably come to mind. Did you know that you can donate a car to these charities, as well?

It is something of an unknown commodity, as people simply neglect to understand that charities are looking for pretty much anything of value that you can contribute. You might first look at this and think that it sounds pretty outrageous to donate your car to one of these charities, but you should further explore the options before totally discounting the idea.

Plenty of people have cars sitting around their home, just picking up dust and killing their grass. Perhaps you have a car that does not run quite as well as it used to, so you had to purchase a new one. What are you going to do with the old one? You cannot sell it, and it does absolutely no good on your side lawn or in your garage. In this case, you might be better off donating your car because it will do good for someone else and it will help you in terms of tax relief.

Vehicle donation is quite a step in terms of philanthropy. However, the prevailing laws out there make it so that there is a lot of benefit for people who decide to help. With that in mind, you should certainly consider helping Goodwill Industries with one of these large, generous donations. In addition to that, you could also donate used card parts, as they can be used by the charities for their scrap value.

Used-Car Donations Take a Hit

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This is from the Wall Street Journal about Vehicle Donations. Please watch the video by following this link below.

http://online.wsj.com/article/SB122100165129316945.html

TAX REPORT
By TOM HERMAN

Used-Car Donations Take a Hit
September 10, 2008; Page D3
If you’re thinking about donating your gas-guzzling sport-utility vehicle to charity and driving away with a hefty tax deduction, think again.

About 900,000 people donated their cars in 2004, but that number dropped to about 300,000 by 2005. As tax columnist Tom Herman explains, a new law changed the amount you can deduct for your donation. (Sept. 9)
While many taxpayers still are giving away used cars, boats or even planes, it’s generally no longer as attractive for tax purposes as it once was. The reason: changes in the tax law that were made in response to concerns that many donors were deducting inflated amounts. According to a recent Internal Revenue Service report, those changes led to sharp declines in 2005, the year they took effect, in both the number of used-vehicle donors and the dollar amount of deductions.

“The economics of giving away a car changed significantly” because of that law, says Greg Rosica, tax partner at Ernst & Young in Tampa, Fla.

If you donate a car or some other vehicle worth more than $500 and the charity or a middleman sells it, you typically can deduct only the selling price, even if it’s far below what you think the vehicle is actually worth. Previously, donors typically could deduct the full fair-market value.

But the law also includes a few important exceptions for donors who understand the fine print and are willing to take the time to do some homework. Here is a summary of the latest IRS data, the tax-law changes, and advice from accountants and other tax advisers.

• Donations. About 297,000 federal income-tax returns reported used-car donations for 2005 — down 67% from 901,000 for 2004. The amount claimed for these donations plunged by 81% to $470 million from more than $2.4 billion in 2004, according to IRS economist Janette Wilson in an article in the Statistics of Income Bulletin, a quarterly publication. Donations of other vehicles also fell sharply, Ms. Wilson reported.

To be sure, the article cautioned that the overall effects of the law change “may be overstated by these comparisons” because vehicle donations aren’t reported separately on Schedule A by taxpayers whose total deductions for noncash contributions don’t exceed $500. Thus, “the number of such additional donations is not known,” the IRS said.

ADDITIONAL READING

• IRS article on 2005 noncash donations
• IRS article on 2004 noncash donations
• IRS Tax Tip 2008-58
• GAO study on vehicle donations (see GAO Report Number GAO-04-73)
• IRS news release on Hurricane Gustav victims
• Witness list for hearing by Permanent Subcommittee on Investigations scheduled for Sept. 11, 2008Additionally, the 2004 numbers were up significantly from 2003, likely reflecting a one-time surge in donations by taxpayers taking advantage of the old law before it changed. For 2004, the total amount claimed for donations of autos and other vehicles rose by nearly 12% from 2003, driven by a 13% increase in the number of contributions, the IRS said in a separate report.

The vehicle-donation figures for 2005 are the latest available IRS data. But a separate study released early this year by the U.S. Government Accountability Office, a congressional investigative agency, said some charities reported a “substantial decline” in the number of vehicles donated from 2003 to 2006.

The National Kidney Foundation, a major charitable organization, has seen an overall decline in its car-donation program since the law was changed. Gross revenue from car donations it received totaled $19.5 million in 2004. Revenue totaled $14.3 million in 2005, $10.7 million in 2006 and $11.9 million in 2007, says Ellie Schlam, a spokeswoman.

• Changes. Under the American Jobs Creation Act, enacted in 2004 and effective in 2005, your deduction generally is limited to the actual sales price of the vehicle when it’s sold by the charity.

For example, suppose you donate a Toyota Camry you think is worth $2,400, based on research in used-car publications and conversations with used-car dealers. The charity sells it a few months later for only $800. In most cases, all you could deduct would be the $800.

As with so many other tax laws, though, there are some important exceptions. For example, you generally can deduct the vehicle’s fair-market value, rather than the sale-price amount, if you claim a deduction for it of $500 or less, the IRS says.

Other exceptions hinge on what the charity plans to do with your donation. For example, the IRS says you typically may deduct the vehicle’s market value if the organization gives it away, or sells it, to a “needy individual” at a price “significantly below” fair-market value “in direct furtherance” of its charitable purpose of “relieving the poor and distressed or the underprivileged who are in need of a means of transportation.”

Another exception: You can typically deduct the car’s fair-market value if the charity uses the car regularly for such purposes as delivering meals to the poor.

Figuring out fair-market value can be tricky. “Generally, vehicle-pricing guidelines and publications differentiate between trade-in, private-party and dealer retail prices,” the Treasury said when releasing guidance on the subject in mid-2005. According to the Treasury, the fair-market value for vehicle-donation purposes will be “no higher than the private-party price.”

For more details on the law, exceptions and other issues, see IRS Notice 2005-44 and IRS Tax Tip 2008-58, available on the IRS Web site (www.irs.gov).

• Advice. If you do decide to donate your car, boat or plane, rather than selling it or trading it in, consider shopping around among charities. First, check to make sure the organization is legitimate. Then ask what it plans to do with your gift — and, if your vehicle, boat or plane is valuable enough, consider trying to find an organization that fits into one of the exceptions outlined above.

“Choosing a charity is a very personal choice,” says Mr. Rosica of Ernst & Young. “For example, you may want to consider finding one that will use your car for its charitable purpose, such as delivering food or clothing to the needy.”

Whatever the case, be sure to pay attention to the record-keeping and substantiation requirements. Also remember you’re eligible to deduct donations to charity only if you itemize your deductions on Schedule A of Form 1040, instead of claiming the standard deduction, the IRS said. And if you make a gift and get something significant in return from the charity, such as tickets to a sporting event, you can deduct only the amount that exceeds the value of what you received.

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