IRS Warns of Sham Charities Looking for Used Cars

The IRS is warning taxpayers to watch out for charities that are clamoring for used car donations as the year winds down. The last month of the year is typically a busy time for charities to collect from taxpayers hoping to generate a year-end tax deduction.

Before donating a vehicle to charity, the IRS suggests you make sure the charity is a bona fide tax exempt organization, which you can do easily by examining IRS Publication 78, Cumulative List of Organizations. The publication is available for downloading from the IRS Web site, or you can perform a search for an organization without having to download the entire publication.

When valuing the donated vehicle for purposes of taking a tax deduction, you should compute the "fair market value" of the vehicle, taking into consideration the current Blue Book value, and factoring in the age and condition of the vehicle and the miles that it has been driven.

Be sure to check your state law to verify the rules for handling a transfer of title.

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