[Anonymous]

Hi A71,

I’m trying to donate my car, but I don’t itemized and thus cannot reap the tax “benefit” of a charitable contribution. The FMV of the car is probably <$1,000. If my parents were to donate the vehicle, and let’s say they are in the 25% tax bracket, will this donation essentially save them $250 (assuming they haven’t hit the 2% AGI ceiling for charitable donations, which I’m sure they won’t)?

The car is registered under my name. Must I go through DMV to change the ownership of the car back to my parents in order for them to take the deduction of my vehicle?

[gans555]

Great question. Here's what I would do…

Your parents are going to get a much better tax break than you would so it would be good for them to claim the deduction. I would gift the car to your parents. No gift tax to pay since you get the annual $13,000 exclusion. Next, I probably would get the title transferred. Then have them donate the vehicle. I don't see any problems with that.

Couple of other things… to get a title transfer, you don't have to go to the DMV, just go to a notary or AAA. Next, charitable contributions aren't subject to 2% limitation. In this case will be 30% of AGI. (Don't even worry about this because you're probably not gonna hit it and even if you do, you can carry it forward 5 years.)

Few more things… the deduction for the car might not be it's FMV. Because it is over $500, the deduction is limited to the charitable organizations gross proceeds. They will sent you something telling you what the deduction is. Also keep track of you're milage. This year you can deduct .14 cents per mile. Something is better than nothing.

[Anonymous]

Wow thank you. I don't understand the mileage though — what can I deduct? The car hasn't traveled anywhere for a charitable cause. I can just deduct .14/mile for whatever reason I've used the vehicle for this year?

[gans555]

Yea your right. I don't think you would be able to deduct milage for that. I believe mileage is only when you perform services for a charity. Here you are just donating a car.

[Author]

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