*kiss* Good-bye Nissan Pathfinder - you've been great

[DrPizza]

Okay.. my house (one month to go! ) is really close to my neighbors... for whatever reason, it bothers them that I have my old pathfinder in my drive-way still (it's about 2 feet from their back yard.)
Anyway, I'd have junked it, but the tires were almost brand new (about 2000 miles on them... got me through the winter) I finally gave up on finding someone who would haul it away for $200... they'd end up with a set of 5 tires (the spare is full-sized and brand new condition) worth far more than 200. The engine is great, the tranny is great, but the frame and underbody is rusting out really badly (1 foot hole observed when I lift of the back seat)
Anyway, my wife called one of those numbers for donating your car to charity....

[HERE'S THE IMPORTANT TAX TIP]

Apparently, when you donate a car to charity, you get a receipt for the Kelly book value for the vehicle. I couldn't find anyone who'd take my pathfinder for 200, with a brand new set of tires on it. But, the charity has someone towing my vehicle away during the next 2 days... and I get to write off $4500!!!!!! That means, I won't be paying the income tax on $4500 of my income- - - donating my car nets me over $1000... $1260 if I'm not mistaken! (apparently there's a limit to the frequency you can donate vehicles for charitable contributions purposes though)

[/end TAX TIP)

And to make a happy ending even better..... I found out tonight that my brother needed new tires on his pick-up truck. 3 hours later, we finished unmounting and remounting all 8 tires. (couldn't simply exchange rims, but I got to learn how to do it myself.)

 

[AgaBoogaBoo]

Nice job!

:beer:

 

[DrPizza]

I wonder if I should cross-post this to hot deals? If I understood everything correctly (which means - if my WIFE understood everything correctly), this is an exceptional deal. Theoretically, someone could find a beat up car, buy it for $100 in December, donate it to a charity, and be able to write off several thousand dollars on their income taxes.

 

[AgaBoogaBoo]

Aren't you a math teacher?

 

[DrPizza]

Yeah, math and physics.
Why's that?

edit: and I work in a pizza shop
And, I'm a jack of all trades (but king of none) - electric, plumbing, etc.
And, I'm soon to be a farmer in the least populous, most redneck county in NY state. I've heard that if I don't chew tobacco, they'll run me out of the county.

 

[fredtam]

Originally posted by: DrPizza
I wonder if I should cross-post this to hot deals? If I understood everything correctly (which means - if my WIFE understood everything correctly), this is an exceptional deal. Theoretically, someone could find a beat up car, buy it for $100 in December, donate it to a charity, and be able to write off several thousand dollars on their income taxes.

They are trying to change the laws that allow you to do that now.

 

[rh71]

we donated an 89 accord for $1500... above what anyone would've paid for that thing. in the end though... my mom (did it for her) said the tax break wasn't really worth it. hmm... maybe you don't actually write off the entire value or something ?

 

[DrPizza]

Originally posted by: rh71
we donated an 89 accord for $1500... above what anyone would've paid for that thing. in the end though... my mom (did it for her) said the tax break wasn't really worth it. hmm... maybe you don't actually write off the entire value or something ?

I guess it'd depend on your tax-bracket as well as what you *could* have sold it for...
If you could have sold it for $1000, then it wasn't a good deal, as you'd only save roughly 375 on taxes.. But, if it was only worth 100... then you made out well.

 

[VirginiaDonkey]

I am thinking of doing the same thing.
I have a 94 Ford Ranger that the tranny is shot. I payed $600 a few months ago for it, drove it for a while before it died. Kind of hard to justify spending $800 to repair $600 truck.

KBB= $3240 retail

 

[Ogg]

it only works if you do deductions and the limit is so high now that its tough to hit it.
We donated our junker a couple years ago and still with that "high"" value we couldnt hit the limit......


but here------->

 

[edro]

Holy crap! We got a emoticon?!?!?!

 

[Pliablemoose]

You also need to be careful that the charity you donate an auto to is a legitimate charity, that your declared deduction is closer to the vehicle's actual value (realistic value) than KBB type valuations, and that the charity you donate the auto to doesn't siphon off the value of the car for other purposes during the multiple transitions the auto title makes during a donation.

 

[maziwanka]

where's CPA when you need him? hahahaha.

im also curious to hear what he has to say about this

 

[DrPizza]

Bump for CPA to see this thread..... (hopefully)

 

[CPA]

Here I am to save the daaaaaaaayyyyyy.........

Actually, Here is a good little article on the whole vehicle charitable deduction thing. Most of the answers have already been posted by other members.

Just make sure you are actually itemizing and not taking the standard deduction. If you are taking the standard deduction, you just screwed yourself out of a vehicle and the reduction to income.

Make sure you won't hit the Alternative Minimum Tax (AMT) as a result of too much income. this will reduce or eliminate the effect of charitable deductions.

Make sure you or the organization didn't greatly inflate the true value of the vehicle.

Make sure the organization is truly a charitable organization.

And if you have pics of the vehicle, keep them, just in case you get audited. This is a good way to help prove the vehicle's worth.

 

[Spooner]

CPA: can you itemize if you are renting? I donated a vehicle to Salvation Army, but think I will get no benefit since I rent my apartment and typically don't itemize deducitons.

 

[pulse8]

You can itemize if you are renting. I did it last year.

 

[Spooner]

Originally posted by: pulse8
You can itemize if you are renting. I did it last year.

yeah, i guess it all depends if you have any real deductions to make it worthwhile.

what else did you deduct while renting?

 

[CPA]

Originally posted by: pulse8
You can itemize if you are renting. I did it last year.

What did you itemize? The property tax portion of your rent payments? charitable deductions? what else? Just curious, because most rentors don't itemize.

 

[Spooner]

yeah, this is the quandry i'm now in with donating a vehicle this year

 

[dullard]

Originally posted by: CPA
Make sure you or the organization didn't greatly inflate the true value of the vehicle.

Make sure the organization is truly a charitable organization.

Those are the keys. Many people have abused the two things listed above and thus there is now a crackdown on this abuse. You cannot legally donate a car worth $200 and claim it was worth $4500. Sure you can try to do it, and many people will get away with doing it. But that doesn't make it legal.

 

[Crab cake]

Originally posted by: DrPizza
I wonder if I should cross-post this to hot deals? If I understood everything correctly (which means - if my WIFE understood everything correctly), this is an exceptional deal. Theoretically, someone could find a beat up car, buy it for $100 in December, donate it to a charity, and be able to write off several thousand dollars on their income taxes.

No reputable charity would accept a car that's not currently tagged. My parents and I have done this twice in the past 3 years. Both times they insisted that we must update the cars' registration before they would accept them. In most states, this mean a smog and or a vehicle inspection. Try to get a $100 clunker to pass these tests.

One other thing that no one has mentioned is the risk of being audited. This must be one of the factors that raisesthe red flag at the IRS because we were audited the very years that we usedthis deduction. Coincidence? Perhaps.

 

[austin316]

quick question about taxes. since it shows 10% rate up to 7,000 and 15% above 7,000, lets say you make 9,000 a year.

is the first 2,000 taxed at 15% and the other 7 at 10%? or is the whole thing taxed at 15%?

 

[DrPizza]

Update: thanks CPA... I checked into it further.... if you attempt to deduct more than FMV (fair market value), you're might find yourself in a tough situation if audited.
There's no way in the world that my car would sell for what the charity quoted.. They used the dealer's selling price for the vehicle in very good condition. It's in fair condition at best. Runs great, body looks good from the outside, but extensive rust underneath. The only reason it might fail inspection would be the hole through the floor under the seat.. (would allow exhaust to enter the passenger compartment, obviously).. that could easily have a piece of sheet metal attached so that it would pass. But, anyone with any knowledge would recognize that the frame isn't going to make it for much more than a year or so.

 

[CPA]

Originally posted by: austin316
quick question about taxes. since it shows 10% rate up to 7,000 and 15% above 7,000, lets say you make 9,000 a year.

is the first 2,000 taxed at 15% and the other 7 at 10%? or is the whole thing taxed at 15%?

you have it slightly backwards, though the end result would be the same. The first 7000 is taxed at 10%, the next 2000 is at 15%