Donating Car To Charity Write-Off To Shrink

[jeffrey]

Pittsburgh radiologist William Poller was driving into work Wednesday contemplating what to do with his 1993 Subaru Impreza. He's ready to get rid of it, even though it's in "great shape."

"I was thinking: Should I put an ad in the paper or just call Goodwill?"

If he's going to call Goodwill, he'd better do it fast.

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... [read more at usatoday.com]