Donating Cars To Charity - New Tax Rules

On June 3, 2005, the IRS released guidance on charitable deductions for donated vehicles. The American Jobs Creation Act (AJCA) radically changed the amount of the deduction taxpayers can claim for their donated car.

Fair Market Value v. Actual Sales Price

When donating a car to charity, a taxpayer traditionally was allowed to deduct the fair market value. The new law changes this valuation to the actual sales price of the vehicle when sold by the charity. The taxpayer is also required to get written and timely acknowledgment from the charity in order to claim the deduction

The AJCA does provide some limited exceptions under which a donor may claim a fair market value deduction. If the charity makes a significant intervening use of a vehicle--such as regular use to deliver meals on wheels-- the donor may deduct the full fair market value. For example, driving a vehicle a total of 10,000 miles over a one-year period to deliver meals is a significant intervening use.

The AJCA also allows a donor to claim a fair market value deduction if the charity makes a material improvement to the vehicle. Under the guidance, a material improvement means major repairs that significantly increase the value of a vehicle, and not mere painting or cleaning.

Interestingly, the IRS has also added an exemption not included in the AJCA. On its own, the IRS has determined that taxpayers can claim a deduction for the fair market value of a donated vehicle if the charity gives or sells the vehicle at a significantly below-market price to a needy individual, as long as the transfer furthers the charitable purpose of helping a poor person in need of a means of transportation.

If you intend to assert one of these exemptions, how do you determine the fair market value? Generally, vehicle pricing guidelines and publications differentiate between trade-in, private-party, and dealer retail prices. The IRS consider the fair market value for vehicle donation purposes to be no higher than the private-party price.

The new provisions of the Americans Job Creation Act certainly make it less attractive to donate a car to charity. Using the exemptions, however, you can still create a sizeable deduction while helping others who are less fortunate.

Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.

In The News:

The Problem with France's Plan to Tax Digital Companies  Harvard Business ReviewFrance recently approved a 3% tax on revenues generated by large digital companies in its territory, a move that is now being investigated as a potentially unfair ...
Before filing your tax returns this year, calculate and pay self-assessed tax  LivemintBefore filing your income tax return (ITR) this year, ensure there is no pending tax payable on your part through self-assessment. For this, you need to take into ...
This is how much income tax you're paying to your state  CNBCHello, New York! The Empire State is home to some of the highest income taxes in the country. It collected $2249 per capita in individual income taxes in 2017, ...
FM Nirmala Sitharaman shrugs off pleas by FPIs on super-rich tax  LivemintFinance Bill amendments propose further tax relief for startups, NBFCs.Finance minister added more safeguards against tax evasion in the amendments to ...
ITR filing: Over 1.46 crore income tax returns filed already; here's how you can choose correct form  Business TodayFiling ITRs is mandatory for all Indians, including NRIs, with a total income of over Rs 2.5 lakh. The threshold for senior citizens (above 60 years) is Rs 3 lakh ...
Why new tax surcharge has stunned foreign portfolio investors  Economic TimesThe business entities known as Association of Persons have been stunned by new surcharge.
Australians who said taxes were 'against God's will' ordered pay up  Deutsche WelleA pair of Australian Christian siblings who refused to pay income tax because it was "against God's will" have been ordered to pay more than AU$2.3 million ...
People angry over rising inflation, heavy taxes in PoK  India TodayPeople in Pakistan occupied Kashmir (PoK) are facing immense difficulties due to the consistent increase in inflation rates and heavy pay taxes implemented by ...
Tax no more |India Today Insight  India TodayThe government's challenge is to pump up falling tax revenues, fulfil its promise of lowering corporate tax rates and spur spending in a slowing down economy.
Higher taxes on the rich, but low returns for the Union government  LivemintThe govt expects the additional revenue from the increased surcharge on individuals at just ₹2724 crore.On Friday, finance minister Nirmala Sitharaman ...
Who can claim credit for state and local taxes paid in a foreign country  LivemintA taxpayer can choose to be governed either by provisions of the tax treaty or by the domestic tax law to the extent more beneficial to him.Under the tax credit ...
TurboTax pushed low-income taxpayers to paid tier to make up for Trump tax law  The VergeTurboTax, facing lower revenues following the passage of President Donald Trump's 2017 tax law, decided to start targeting lower-income individuals with paid ...
Opinion | How we could improve tax compliance behaviourally  LivemintOne of the fallouts of years of socialist thinking is that becoming rich is considered a sin. This narrative needs to change.
Why high income tax rates are so unjust in India - Govt's justification  Economic TimesIt's true, there are countries where the super rich pay even higher taxes than they do in India.The government used this to justify the higher taxes that those ...
Special privileges, recognition for top tax payers, suggests Economic Survey  LivemintEconomic Survey said that research across countries has highlighted that tax evasion is driven significantly by tax morale.Expedited boarding privileges at ...
No More Deals: San Francisco Considers Raising Taxes on Tech  WIREDAt a recent postmortem for the so-called Twitter tax break, the divisive San Francisco policy that drew tech companies to a beleaguered stretch of downtown, the ...
Verify pre-filled data carefully before filing tax  LivemintPre-filled information is only available for those filing their tax on ITR-1 or ITR-4 completely online using the income tax department's e-filing website.The form ...
We should celebrate those who pay taxes: View  Economic TimesThe minority that accounts for its income and pays taxes every year is lonely in its faith and sense of duty.
More classes may be asked to file income tax returns to check evasion  LivemintThe government may notify some other class of people who would be required to file income tax returns (ITR).The Modi government has been consistently ...
Changed jobs? Report all salaries and pay taxes  MoneycontrolTax return filing may be relatively complex in case you have changed your job and have worked with more than one employer during a particular financial year ...
Analysis | How Europe's 'Digital Tax' Plans Will Hit U.S. Tech Companies  Washington PostFrance and Britain are hatching plans to tax the revenue, rather than the profit, of companies such as Facebook Inc. and Alphabet Inc.'s Google that make their ...
Buyback tax: A loophole fixed or an anomaly made worse?  LivemintIn the past three fiscals, Indian firms bought back shares at an average rate of ₹47800 crore.
NHAI plans land appreciation taxes to finance projects  Economic TimesNHAI is working on a mechanism to share gains in land value on account of upgradation of highways.
Morgan Stanley's rich clients withdrew a surprising amount from accounts to pay their taxes  CNBCWealthy clients liquidate some investments every year to cover their tax bill, so presumably this was higher than what Morgan Stanley has seen previously.
France tech tax: What's being done to make internet giants pay more?  BBC NewsFrance is to become the first country in Europe to introduce a tax on tech giants like Facebook, Amazon and Google. The move has upset the US. So how does it ...
Beware. Other Nations Will Follow France With Their Own Digital Tax.  The New York TimesLast Thursday, the French Senate passed a digital services tax, which would impose an entirely new tax on large multinationals that provide digital services to ...
Govt widens scope of direct tax code to make compliance easier for taxpayers  LivemintNEW DELHI: The government on Wednesday widened the scope of a new direct tax code that is on the drawing board to make compliance easier for taxpayers, ...
Paying rent or letting out your place? Know the tax treatment on house property  MoneycontrolThe annual value of a house property is the amount of rent which it is reasonably expected to earn.
Budget 2019: Is it feasible to reintroduce inheritance tax in India?  India TodayNoted economists feel that it would be a good idea to reintroduce such a measure in the wake of lower tax collections and need for higher spending in the social ...
Govt’s new buyback tax set to hit MF investors, shareholders alike  LivemintThe new buyback tax coupled with dividend tax may lower the return from various equity investments.Investors should keep a close eye on how companies and ...
Explainer: Will taxing the super rich affect foreign investment inflows?  India TodayIndustry experts say that new tax regime for the rich could make India uncompetitive and expensive for foreign investors.
What is the last date to file income tax return? - It's not same for all  Economic TimesThe last date to file income tax return (ITR) varies for different categories of taxpayers. For individuals, Hindu Undivided Families (HUF) and those taxpayers ...
3 tax-planning lessons from Joe Biden's tax returns  CNBCFormer Vice President Joe Biden takes the stage for the second night of the first Democratic presidential debate on June 27, 2019 in Miami, Florida.
The New Biden Tax  The Wall Street JournalFor a candidate who was supposed to be the voice of moderation in the race for the Democratic presidential nomination, Joe Biden spends a lot of time ...
No relief from super-rich tax for FPIs structured as trusts: Sitharaman  Business StandardForeign portfolio investors (FPI) functioning as trusts in India will have to pay the tax surcharge proposed in Budget, said Finance Minister Nirmala Sitharaman ...
Budget 2019: Surcharge rate on income tax increased for super-rich  LivemintCurrent highest rate of applicable income tax rate is 35.88%.Surcharge which is charged over and above the tax amount has been increased for those earning ...
America needs to see Amazon’s tax returns  The VergeTax law keeps us from knowing what Amazon's tax bill really is — even as politicians like Joe Biden, Elizabeth Warren and even Donald Trump call out the ...
Will Aadhaar interchangeability for ITR make PAN redundant?  LivemintApart from interchangeability with PAN, Aadhaar can also be quoted in other transactions that otherwise require quoting of PAN.In a few years, Aadhaar may ...
Foreign investors' lobby group asks India to reconsider high taxes  MoneycontrolForeign investors are urging India to reconsider its decision to increase taxes on certain groups of wealthy portfolio investors, arguing the move will hit the ...
If you miss to file return by due date, you will be penalised, even get jailed  LivemintGiven that the deadline to issue Form 16 was extended till 10 July, the last date for filing income tax return (ITR) for FY18-19 may get extended well beyond 31 ...
FY19 gross tax to GDP ratio dips to 10.9% on shortfall in indirect tax revenue  LivemintNew Delhi: The gross tax to GDP ratio declined to 10.9 per cent in 2018-19 as indirect tax revenues fell short of budget estimates by about 16 per cent, due to ...
Corporate Tax Rates: How Low Can You Go  International Monetary FundBy IMFBlog. In life, two things are certain: death and taxes, the saying goes. Unless you are a large multinational corporation, in which case, maybe not. Over the ...
Luxury realty braces for impact from higher taxes on ultra-rich  LivemintDevelopers are concerned that the tax rate increase may lead to buyers holding back on buying luxury homes.The cocktail of tax increases, glut in supply and ...
Things You Should Know Before Filing Your Income Tax Returns (ITR)  NDTV NewsITR filing: Non-filing of return of income may result in penalty and prosecution, according to the Income Tax department.
AOC's policy adviser wants to tax high incomes at 99%  Business InsiderDan Riffle, Rep. Alexandria Ocasio-Cortez's senior policy adviser, believes that income over a certain threshold should be taxed at 99%, he told Vox.
High indirect taxes are hurting exports, Make in India initiative: Experts  Business StandardHigher tariffs and taxes seem to be hurting India's drive to raise the share of exports in gross domestic product (GDP) and push up economic growth. The recent ...
New income tax rules with tougher penalty comes into effect: 10 points  LivemintNEW DELHI: Under the revised guidelines of the Income Tax department, those indulging in serious offences under black money and benami laws will not be ...
As Nations Look to Tax Tech Firms, U.S. Scrambles to Broker a Deal  The New York TimesThe proposed levies on firms like Facebook and Google are pitting traditional allies against one another and threatening to set off a cascade of tax increases ...
One-Time Amnesty Scheme in Making for Old Income Tax Cases Worth at Least Rs 8 Lakh Crore  News18A one-time amnesty grant for legacy income-tax disputes worth at least Rs 8 lakh crore may be in the works, according to sources. They speculate that a ...
Progressive taxation will help bring down income inequality  LivemintThe govt's focus on rationalizing corporate tax rate is the need of the hour for Indian economy.In a dynamic economy, some sectors may need to be incentivised.
Super-rich tax on FPIs: We’ll take it as it comes, says FM  BusinessLineFinance Minister Nirmala Sitharaman on Monday ruled out any clarification on the surcharge on the super-rich and foreign portfolio investors (FPI), at least for ...
Syntax and the “sin tax”: the power of narratives for health - The BMJ  The BMJAs we reach the final weeks of Boris Johnson and Jeremy Hunt's campaigns for Number 10, we are starting to see some of the policies that they may adopt if ...
What are CPSE ETFs? You can soon save taxes by investing in them  LivemintMumbai: You can soon save taxes by investing in Central Public Sector Enterprises (CPSE) exchange traded funds (ETF) as the government is set to introduce ...
Pakistani businesses on strike over new IMF backed taxes  Economic TimesHundreds of thousands of Pakistani businesses are on strike nationwide to protest a new sales tax, which opposition political parties say is being imposed as ...
Have NDA’s tax reforms been counterproductive?  MoneycontrolWith tax revenue collections falling short of budget estimates, there is a need for the govt to reconsider its ambitious targets and reform the tax system.
What the IRS doesn’t tell you about self-employment taxes  MarketWatchMany taxpayers get confused about whether they owe the 15.3% self-employment tax.
India's hedge funds threatened by higher taxes  Economic TimesDomestic hedge funds have taken seven years to reach $6 billion in investment commitments.
Tinkering with taxes for foreign and domestic investors negative for market: Samir Arora  Economic TimesI do not think this will revive the market in the short term, says Helios Capital founder.
Budget 2019 analysis: What income tax changes mean for you  Economic TimesHere is a look at the tax proposals announced in both the budgets and their tax impact on your pocket.
Keep your date with filing income tax returns  MoneycontrolWith the Income-tax Return (ITR) filing deadline fast approaching on July 31, 2019 [for individuals not subject to tax audit provisions under the Income-tax Act, ...
View: If it moves, tax it. That's desperate, India  Economic TimesBy Andy Mukherjee Desperation is creeping into India's economic policy-making. Having lost the fiscal plot, bureaucrats are trying to marshal resources by ...
Is it viable to reintroduce estate tax in the upcoming budget?  LivemintAhead of the Budget 2019, there is speculation that the govt may reintroduce estate taxes in order to enhance tax revenue.Ashwini Kumar Sharma asked 4 ...
LTCG makes filing Income Tax returns tough  Times of IndiaIndia Business News: A recent update in the software utility that enables taxpayers to file their returns online has created hurdles for taxpayers who have earned ...
Scottish income tax £941m short of forecast  BBC NewsThe amount of income tax revenue raised by the Scottish government in 2017/18 went up by 1.8% but was still £941m short of original forecasts. The HMRC ...
Finance ministry justifies higher taxes for super rich  Business TodayFlights between India, Europe to increase by over 25% from winters: Air France-KLM, Deficient monsoon hits Kharif crops, acreage down 27% so far: Govt, ...
Tax On Super-Rich Decoded: Here's Your Complete Guide To Understanding New Rules  NDTV NewsIncome tax slab: "In view of rising income levels, those in the highest income brackets, need to contribute more to the nation's development," Finance Minister ...
Tax fraud of about ₹38,000 crore detected last year  LivemintNEW DELHI: Tax officials detected ₹37,946 crore worth of tax fraud in 2018-19 and ₹6,520 crore in the April-June period of the current financial year after the ...
Can countries lower taxes and raise revenues?  The EconomistRARELY has a dinner-table scribbling created such a legacy. In 1974 Arthur Laffer, an economist, sketched a simple diagram on the back of a napkin to illustrate ...
Trump’s Tax Law Threatened TurboTax’s Profits. So the Company Started Charging the Disabled, the Unemployed and Students.  ProPublicaThe move by TurboTax maker Intuit to charge more lower-income customers has helped boost revenue.
Income tax return filing: Here's your step by step guide  Economic TimesJuly 31 is the last date to file your income tax return (ITR) for FY 2018-19. By filing your ITR on time, along with certain benefits such as carry forward of losses, ...
Tax dept seize ₹400 crore Noida plot belonging to Mayawati's brother  LivemintThe Income Tax Department said on Thursday it has attached a benami plot in Noida worth ₹400 crore belonging to BSP chief Mayawati's brother Anand Kumar ...
Budget 2019 | Wealth tax – The idea is to play fair, but is the time ripe?  Moneycontrol.comChances are wealth tax might make a comeback. Even so, the government would do well to put safeguards in place to ensure the common man is not put at a ...
Back-to-school sales tax holidays: These 16 states are giving families a tax break  USA TODAYMillions of American families with children who are school- or college-bound will have the chance to save a few dollars this summer. Sixteen states are holding ...
Budget 2019: Income tax collection target too steep, say experts  Business StandardThe income tax collection target was still far from realistic despite the number being revised downwards in the full Budget from the interim Budget projection, ...
How a Tax Loophole Is Helping Silicon Valley Workers Save Millions  The New York TimesA little-known tax break allows some start-up employees who own company stock to avoid paying taxes on up to $10 million when they sell their shares.
Banks approach Delhi HC against ₹38,000 crore service tax demand  LivemintNew Delhi: Thirteen banks have moved Delhi High court against a government demand for *service* tax to the tune of of ₹38,000 crore. Their claim is that the ...
Facebook answers how Libra taxes & anti-fraud will work  TechCrunchFacebook provided TechCrunch with new information on how its cryptocurrency will stay legal amidst allegations from President Trump that Libra could facilitate ...
Maximise revenue, minimise tax  The Indian ExpressIndia has just one policy option to advance private investment and become a $5 trillion economy — reduce corporate tax rate for all firms to 22 per cent, reduce ...
Taxes May Help You Drive A Tesla Model 3 For Free, But Not For Long  InsideEVsThe WhiteBoard Finance YouTube channel teaches how to deal with tax credits in order to be able to drive a Tesla Model 3 for free for six months.
22 States Considered Eliminating the ‘Tampon Tax’ This Year. Here’s What Happened.  The New York TimesMenstrual products are subject to sales taxes in 35 states, and lawmakers' efforts to exempt them have foundered. Now supporters of 'menstrual equity' are ...
Tax foreign tech giants operating in India, say RSS ideologues, Gandhian  Business StandardThree Rashtriya Swayamsevak Sangh (RSS) ideologues, including K N Govindacharya, and a Gandhian have written to Finance Minister Nirmala Sitharaman to ...
Big Banks Are Earning Billions of Dollars. Trump’s Tax Cuts Are a Big Reason.  The New York TimesThe five largest banks in the United States reaped tens of billions of dollars in profits in the first half of the year, thanks in part to a strong economy and to the ...
Back-to-school sales tax holidays bringing savings to 16 states  Fox BusinessRetailers are gearing up for back-to-school shopping, and parents in students in many states will be able to pick up their supplies without having to pay any state ...
9 Airbnb Rental Tax Deductions You Can Take for Your Vacation Properties  EntrepreneurWith summer vacations at a peak, it's a great time to review the top nine tax deductions you can ake for your short-term rental properties through Airbnb, VRBO, ...
Boris Johnson says tax cuts bring in revenue. But we now know that’s a myth  The GuardianHe cites the Laffer curve theory – yet it's no more credible than a magic money tree, says Guardian columnist Polly Toynbee.
Tax department tightens the noose on offenders  LivemintCBDT's stiffer tax provision will ensure serious offenders can't escape prosecution.The guidelines restrict the number of times a person can file a compounding ...
Budget 2019: Sitharaman urged to bring cigarette taxation to pre-GST level  Business StandardThe Federation of All India Farmer Associations (FAIFA) has urged Finance Minister Nirmala Sitharaman to correct an error in cigarette taxation under the new ...
Task force on Direct Tax Code to submit report by July 31: FM Nirmala Sitharaman  Economic TimesNEW DELHI: Finance Minister Nirmala Sitharaman on Thursday said that a task force on the new Direct Tax Code will submit its report by month end. The new ...
Income tax burden weighs on the salaried class even as costs climb  LivemintNEW DELHI: I generally don't talk about salary, but any salaried employee earning ₹1 lakh a month in a metro city is living a hand-to-mouth situation, says ...
Soon, Tax Dept to send SMS on 18 types of high-value transactions  BusinessLineSoon, you will receive an SMS from the Income Tax Department if you quote your Permanent Account Number (PAN) for 18 types of financial transaction where it ...
Budget unlikely to up Rs 2.5 lakh income tax exemption limit  India TodayThe current basic income tax exemption limit of Rs 2.5 lakh is unlikely to be raised in the forthcoming full Budget 2019-20, according to informed sources, as the ...
Share buyback tax brings in new challenges for listed companies  The Financial ExpressThe major advantage of the buyback is that no tax equivalent to dividend distribution tax is applicable to companies.
Income tax benefits on NPS explained in 5 points  LivemintThe government has made National Pension System or NPS more attractive by announcing new income tax benefits in Budget 2019 for investors in the pension ...
Shipping industry needs more to maximise the opportunities created by GST  Economic TimesIn a high-volume, low margin business like shipping, even a 5 percent cost disadvantage can dent the competiveness of domestic shipping businesses ...
IndiGo Q1 Results: Highest ever profit after tax of ₹1,203 crore  LivemintNEW DELHI: InterGlobe Aviation, that runs the low-cost airline IndiGo, today reported a profit after tax of ₹1,203 crore for the first quarter of the current financial ...
Refundable tax credits would help alleviate poverty  The Conversation - CanadaWe have entered a new election cycle, and it appears that a discussion about tax policy will consist primarily of bickering and court challenges around the ...
The government’s budget math faces a tax challenge  LivemintInvoking the analogy of an elephant that is satisfied with a small offering of rice and doesn't trample upon the paddy fields, India's new finance minister, Nirmala ...
Foreign portfolio investors bear the brunt of taxation flip-flops  LivemintA senior official at the finance ministry remarked a day after the budget that the most complex part of the Finance Bill proposals are contained in Part I of the first ...
San Francisco pulls the controversial “IPO tax” because it wasn’t simply an IPO tax  Vox.comSan Francisco has pulled a controversial measure to impose a new tax on startups filing to go public, partly because the first draft of the proposal swept too much ...
No change in dividend distribution tax  Economic TimesFinance Secretary Subhash Chandra Garg on Friday ruled out any change in the dividend distribution tax, but expressed flexibility that grandfathering tax on ...

Income Tax Returns Your Accountant Should Not File

You've been feeling uneasy (perhaps even guilty) because you've failed... Read More

Getting A Second Extension to File 2004 Taxes

Millions of people file tax return extensions every year. The... Read More

How Likely Are You To Be Audited?

Statistics for IndividualsUnfortunately, the IRS increased its rate of auditing... Read More

Requirements To Produce Tax Information (Whats Up With That?)

"What we've got here is a failure to communicate." ... Read More

How to Maximize Your Home Business Tax Deductions for 2005

Someone once said, 'the best way to calculate your taxes... Read More

How To Get An Instant Pay Raise

As a gentleman was leaving my class recently, he wanted... Read More

Are You An Innocent Victim of These Popular Myths?

Misconceptions, misinterpretations and just plain "untruths" are floating about income... Read More

What to Do If You Can?t Pay Your Taxes

The end of tax filing extensions is quickly approaching. What... Read More

Taxation of Isle of Man Companies from April 2006

At the present time a company incorporated in the Isle... Read More

Rental Property Tax Deductions

Own residential rental properties? This article discusses how income from... Read More

Some Folks Pay A Lot Less Tax Than Others On Very Same Income?Did You Pay Too Much Tax In 2004?

Someone once remarked, "Next to being shot at and missed,... Read More

E-commerce Taxation

The means and types of businesses have transformed with advent... Read More

Know A Tax Cheat? Get Paid To Tell The IRS

According to the IRS, taxpayers underpay their taxes by some... Read More

Tax Deduction for Alimony Payments? - Yes!

Over 50% of marriages end in divorce in the United... Read More

How to Reduce the Estate Tax Using the A-B Revocable Living Trust

In a past article I relayed the plight of the... Read More

Small Business Tax Issues for Self-Employed Individuals

The United States is a nation of entrepreneurs. There are... Read More

Tax Reform, My Way

We need real tax reform and we need it now.... Read More

Small Business Tax Deductions for Year End 2004

As a small business owner, it's wise to familiarize yourself... Read More

Taxation of Forgiven Debt: The 1099C & You

Often people fall on hard times and stop paying on... Read More

Take Control of Your Taxes

As everyone in the U.S. knows, we have just passed... Read More

Tax Investigation - What You Need To Do

The knock on the door from a Tax Inspector is... Read More

Employment Taxes ? Depositing With The IRS

If your business has employees, you must pay employment taxes.... Read More

The Seven Deadly Tax Sins: Commonly Missed Deductions

It's that time again, the April 15 tax deadline is... Read More

Business Tax Loophole: Leasing Assets To Your Corporation

While there are many equally valid reasons to incorporate, saving... Read More

Early Distributions From Retirement Plans

An early distribution from an Individual Retirement Arrangement (IRA) or... Read More