By Kay Bell • Bankrate.com
The ads are still out there: 'Donate your car and get a tax break.' Technically, the ads are true.
In this tax tip: • $500 limit
• Intervening-use exception
• Break for bargain basement sales
• Other donation rules still apply
• Charitable gifts require itemization
But some people who give away an old auto this year could find their tax break smaller than they expected. And a few donors, thanks to the intricacies of recently released vehicle gift guidelines, might be able to boost their deduction amount.
Because some taxpayers got greedy when it came to claiming vehicle donations, the rules on how much you can write off were tightened as of Jan. 1, 2005. A November 2003 General Accounting Office report found wide discrepancies between the value that some auto donors claimed on their tax returns and the actual worth of the donated cars. These excessive vehicle valuations, according to the GAO, cost the U.S. Treasury $654 million in tax revenue in 2000."