One must be thinking what car donation is? The answer is here. Car donation is a process of giving away an old automobile/vehicle to a charitable trust or an organization. In United States these donations provide certain tax benefits and therefore, car donation has become a famous practice there. Certain critics have compared car donation as a mean of tax shelter. Due to car donation, the organizations in United States which do not earn much profit rely on car donation for the sake of financial help to cater to their needs. This process is spreading pretty widely on a commercial basis. According to a survey conducted in the year 2001 it was found that 733152 tax payers reduced their tax paying by $550 million. This process benefits both, i.e. the seller as well as the charity. Thus, the process is beneficial in multiple ways.
As we all know that advertising is the easiest way to dispose any old belonging (here, CAR), the person donating the car needs to fulfil certain post donation requirements so as to be eligible for the deduction of tax and reap those benefits. These include things such as obtaining a written acknowledgment of the car’s subsequent sale by the charity and itemizing various tax returnsinstead of taking the standard education into consideration. Now, for the vehicles which have a market price of less than $500 the deduction amount almost comes down to the donor’s own estimated price of the car’s value, even if the charity receives less money from its sale in in the market. Now, for cars whose market value is greater than $500 are sold in an auction. The United States Internal Revenue Service advises which started in the second half of the year 2004.
The rules for determining the amount that a donor may deduct for a charitable contribution of a qualified vehicle, including an automobile, with a value claimed over $500 can be changed at the beginning of 2005 as a result of the American Jobs Creation Act of 2004. In general, we can conclude that that Act limits a donor’s deduction to the amount of the total proceeds from the charity’s sale of the auctioned vehicle. For the vehicles which are valued over $500, taxpayers are required to attach the charity’s written acknowledgment to their tax return so as to avail the benefits of tax. It has been noted that the car donation schemes in United Kingdom are different from the ones in United States.In United Kingdom, there are no tax benefits on car donation. Car donation is widely practised in America ranging from highly-organized to truck companies that support a charity.
It is obvious that a charity will be indulged in some kind of donation. So various charity use car donation directly to transport volunteers and suppliers to cater to the various areas which need help. Some even have their own car lots to sell the donated cars but many of them have their donations processed through auto auction companies.