Two deserving charities which accept cars for donation are The Salvation Army and The Military Order of the Purple Heart Service Foundation (known simply as Purple Heart). Donating a car to a charitable organization benefits the donor in several ways. The most obvious advantage to the person who gives his/her car to a charity is the tax deduction; however, donating a car has other benefits. All of the paperwork necessitated by the donation is done by the charity. The charity will also provide the donor with the receipt he/she will need to include when filing tax documents. In addition, the charity will arrange for the vehicle to be picked up and transported to the charity or to the auction site the charity uses. Since the benefits of donating a car are numerous, are there any significant differences between the Salvation Army car donation program and that of the Purple Heart which makes one program better than the other?

The obvious difference between the two programs is the groups which they benefit. Funds given to the Salvation Army provide a wide array of services for persons whose lives have been broken apart by any number of forces. The Salvation Army provides residential programs for people recovering from alcoholism and/or drug addiction. It also provides non-residential job training as well as employing many people in its Salvation Army stores. In addition, The Salvation Army provides meal services for residents and any other person in need. The Salvation Army is entirely self supporting through its stores which sell donated items and through its legendary Christmas Red Bucket campaign.

Purple Heart serves military veterans and their families throughout the nation. Purple Heart administers a variety of scholarship programs for veterans and their dependents. It also educates veterans on their benefits and represents them in the benefits appeals process. Purple Heart represents veterans before Congress and assists veterans in processing any paperwork needed to receive their benefits. The organization makes a special effort to find and assist homeless and disabled veterans. No veteran is ever turned away from Purple Heart.

Both The Salvation Army and Purple Heart are worthy organizations which meet all federal reporting standards required of reputable charities. The main distinguishing characteristic between their two programs is that The Salvation Army will accept non-working vehicles providing they were manufactured before 1990. Purple Heart accepts only working vehicles regardless of their year of manufacture.

Since these two fine charities have programs which are so similar, how can a person decide which should receive his/her car donation? The deciding factor for most people wishing to make a car donation will be the nature of the work the charity accomplishes. By making a site visit to either The Salvation Army or Purple Heart one can readily decide which charity should receive the proceeds derived from the donation of a car.

Not all car donation deductions are created equal ? there are even cases where donating an auto in good faith can actually increase your tax liability under certain circumstances. Like anything else involving the IRS, the burden of proof is upon you, so the more information and documentation you have to back up your car donation deduction, the better.

Thankfully, just as rules have tightened up for donors, the onus of documenting the ultimate use or destination of a donated car rests with the charity receiving your car donation. Deductions are now tied to the ultimate use of the vehicle. So, if the charity you choose or, the third-party (often for-profit organization) that acts as an intermediary between yourself and said charity, sells your car at a loss, you’d have a hard time claiming fair market value for such a donation. The charity is required to give you a receipt stating the use of the vehicle within 30 days of donation, whether it’s actually met its final fate yet or not. If it is used and later sold, you’ll receive a new receipt outlining this use, too.

On the other hand, if the charity you choose has a mission that includes using the donated vehicle to further their mission or they sell it at a loss to a needy family, you may still claim the ?fair market value.? This may, however, get your return some unwanted attention that you may not welcome for other reasons. If this doesn’t sound like a good idea to you, it may be wise to consider something other than car donation for deduction purposes.

Indeed, it pays to be careful of who is receiving your donated auto. This is especially true in the case of car donations and deductions taken from charities that are not recognized as non-profit organizations by the IRS. This is easily checked, and doing so can save you a great deal of heartache later. Charities are required to provide you with information regarding their non-profit status with the IRS and tax ID numbers you can check yourself with the IRS website.

Perhaps the most common happenstance where it doesn’t pay to donate a car is when the rest of your allowable deductions for a given year, when added to the car donation deduction, add up to less than the standard deduction allowed you. Of course, this differs depending upon how you file.

For instance, if you file as a head of household you’ll have to come up with nearly $2,500 more than if you’d filed as single or married filing separately to reach that standard deduction amount. This can be difficult for those who are simply working for a living as opposed to those who are self-employed.

It is also useful to note that the higher your tax bracket, the less a deduction will actually take off your total tax burden. This is because deductions are taken from your net income, not the total tax as many suppose. As such, legitimate car donation deductions are typically worth about a third after figuring out taxes, less if you’re in a higher tax bracket.

That said, in the case of a high value car donation, deductions can make the difference between paying in a higher or lower tax bracket. This can have important implications on your total tax burden that far outstrip the actual value of the car donation. Deductions may, on the other hand, have little or no effect on your final income bracket.

It’s always best to check and see how close you are to the edge of a more favorable income bracket near the end of a given year. Since you’re allowed to make donations up until the 31st of December, as long as you get a certificate of receipt, it doesn’t even matter if the car is hauled away until the next year, as long as you have a piece of paper stating that the initial transaction occurred before the 31st.

However, the regulations that govern how car donation deductions can be valued have seriously impacted the once booming market of car donation. Deductions have fallen sharply as well, and it is estimated that the IRS is now saving more than half a billion dollars per year in reclaimed revenues. Aren’t you glad you could help? You should be if your car donation deduction is actually a liability under the new rules.

These are some of the most important and best charity car donation tips you’ll need to consider before donating your car, truck, van or other any other vehicle. You can donate cars, trucks, boats, airplanes, ATV’s, even old motor homes and many other types of vehicles and get a good tax deduction.

1. First it’s important to know that the laws were changed in 2004 limiting the donor’s used car donation tax deduction to the amount the selected charity ends up selling the car for.

2. You want to find out if the charity is rightly eligible to be the receiver of tax deductible contributions so make sure that you ask for the organization’s Internal Revenue Service’s “Letter of Determination.” This will verify their status.

3. Make sure to get a good well-documented receipt from the charitable organization for your vehicle or car donation.

4. In order not to send up any red flags on your income tax return know that the IRS looks carefully at non-cash donations so make sure to clearly document the correct car or vehicle value and keep accurate detailed records.

5. If your used vehicle is worth $500 or even more, then complete the newest Internal Revenue Service tax deduction form, the number may change form time to time, fill out the proper portion and attach it to your income tax return. You must also include a written acknowledgement from the charity.

If your charitable organization sells your donated car, then they must provide you with the sales price within 30 days with a certification the automobile, truck, van or other vehicle was sold at between parties not related to each other. The donor’s tax deductions must be limited to the total the charity sold the car or vehicle for. If they don’t sell the car, they must provide you, the donor, with a receipt within approximately thirty days of the sale, whenever that occurs. They must also certify to the donor how it intends to use or upgrade/repair the car and state in writing that they will not sell the vehicle or transfer it to any other party.

6. If your car is valued at $5,000 or more you’ll need to get an independent appraisal and complete the appropriate part of the Internal Revenue Service form.

7. For cars or vehicles that are worth under $5,000, use either Kelley Blue Book or a guide from NADA to determine the current market value. Use the right and correct figure for the date, mileage, and car’s condition. Don’t just pick the highest figure for your vehicle year and model and not note other important factors. The IRS will look down on this.

8. Take several close-up pictures of the vehicle inside and out.

9. Save all your receipts for any upgrades including any new tires to document and verify the car or vehicle’s value.

10. It’s important to know that it’s not the charity or charitable organization, who is obligated to come up with the correct value and you’ll have to pay any penalties if the IRS audits or challenges you and finds your figures are unfounded.

Finally be aware that some charities use a donated car or vehicle for transportation or for hauling and they benefit directly from the donation. But in most cases the vehicles or cars are sold by the charity, dealer or car donation center to help raise funds for the charitable organization. When this happens, if it’s the dealer, the charity may get only a flat fee and may be as little as $50 for your used car. So check with the charity on how they intend to handle the donation if this is important to you.

These are some of the best charity car donation tips you can put to use immediately if you’re considering donating a car, truck or other vehicle to a charitable car donation program.