This is it. The end of the 2014 tax year.
One business day left to make moves that could lower your tax bill.
Since December is traditionally the month for giving, I've focused a lot on tax-related charitable donations this month. Far be it from me to break a streak at this late date.
The final Weekly Tax Tip of 2014 looks at uncommon charitable gifts, such as miles driven to help your favorite nonprofit, gifting certain appreciated assets and even sending Uncle Sam a few dollars to pay down the federal debt.
The many pluses of donating a vehicle: Another less common charitable donation that I'm particularly fond of is donating a car or other vehicle.
As I noted a few years ago, the hubby and I turned our AMC Pacer over to the Washington, D.C., Goodwill operation. The experience was a win-win-win.
Win number one was that someone got a ride at a bargain price. We discovered Larry, as we had named the auto (yes, we do that), had a new home when a couple of weeks after our donation, we saw him in a shopping center parking lot.
We knew it was our old car because, really, how many of these ugly vehicles were still around? Plus, Larry had a section missing from his grill; it was gone when we bought him used a couple of years earlier. We checked and this car was missing a section of its nose, so we knew it was Larry.
Win number two was that Larry being back on the road meant that Goodwill had made some money from his sale.
And the third win was that the hubby and I got a charitable donation tax deduction.
Still around, but harder to claim: Such donations are still sought by charities across the country. The flier below from the Purple Heart Foundation recently showed up in our mailbox.
And the Austin public broadcasting radio station regularly plays spots soliciting vehicle gifts.
But the process isn't as easy as it was when we put Larry up for adoption.
Back when we donated Larry, the process of giving away a car to a charity and writing it off was a snap. We simply used the Kelley Blue Book value as our deduction amount on Schedule A.
A lot of folks, however, were inflating those valuations. So in 2005, Congress changed the auto donation tax law.
Now the amount you can claim as an itemized charitable deduction depends in part on how the qualified charity uses the vehicle.
In order for you to get the maximum tax deduction on your car donation, the receiving charity must use the vehicle in its operations or give it to a person in need.
But if the charity sells the vehicle, your deduction is based on the price the organization gets for the auto.
That means you must wait to hear from the charity -- you should get an Internal Revenue Service Form 1098-C -- so you'll know how large of an itemized deduction you can claim.
The IRS has a special brochure, Publication 4303, A Donor's Guide to Vehicle Donations, with more details on giving away a car (or boat or airplane or other motorized vehicle) to a charity and claiming the proper deduction. Check it out if you'd rather give away your old auto instead of haggle with potential buyers.
Yes, it's more difficult to donate your jalopy than it used to be. But it's still a viable option that pays off for you on your taxes, as well as for the charity and the future new owner.
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