Donating a clunker won't be as good a deal after Jan. 1
Highlights from the USA Today article:
Tucked into the American Jobs Creation Act of 2004 — the big corporate tax-break bill that Congress passed this week — is a crackdown on a feel-good practice that has fast become one of America's favorite tax deductions: donating an old car to charity. The bill says that as of Jan. 1, you can take a tax deduction only for what a car sells for at auction after you give it to a charity. Under the old law, you could deduct what you could document as "fair market value."
The result of the change to taxpayers: The amount you can deduct is going to plummet. For instance, a $1,500 clunker likely will sell at auction for about $500. You'll get a letter from the charity after it sells telling you the price. There goes your fat deduction.
The only exception is a car you value at $500 or less. You can take that deduction without waiting for the charity's price.
Full article here:
USA Today article