Vehicle Donations – Here’s How to Get Maximum Tax Value

Joe bought a new pickup truck, but the dealer wouldn’t give him what he thought was fair trade-in value for his old rig. The amount they offered amounted to “giving the truck away.”

Recalling a radio commercial he’d heard, Joe looked up a local organization that takes donated vehicles and provides a tax write-off for the donation.

He called them, they worked out a “fair market value” that pleased Joe, the organization picked up the truck and title, and everybody was happy.

The following year, though, Joe got a letter from the IRS.

That’s seldom a good omen.

When the smoke cleared, Joe discovered the allowable tax deduction for donated vehicles largely depends on what the recipient DOES with the vehicle, and Joe’s truck had been auctioned at a price significantly below the fair market value Joe declared.

In the end, he received a little less money for his truck than the auto dealership offered and had to pay back several thousand dollars to the feds.

Ouch.

How to Make Sure Your Vehicle Donation is a Good Decision

First off, I’m not a tax attorney, an accountant, or the son of an accountant. The advice I’m providing here is from experience and is based on my interpretation of the current IRS regulations. Before deciding how to handle the donation of your vehicle, you may want to get professional advice. 

Joe’s mistake, he later discovered, wasn’t that he decided to donate his truck instead of handing it over to the dealer for a song.

The real problem was that Joe listened to a radio commercial, got the jingle stuck in his head, and figured vehicle donation would be treated the same way by the IRS.

That’s not so.

how to help with car donations

Fundamentals of Car Donation

You’ve undoubtedly seen or heard ads by charities that can turn your unwanted car, truck, or boat into a welcome gift of cash to the organization.

Prior to a 2005 change in the tax code, you received the “fair market value” write off for your vehicle, regardless of what the charity did with your gift.

That’s the price a reasonable person would gladly pay for a vehicle like yours and in the same condition of yours.

Most nonprofits don’t have a car lot. They auction off the vehicles donated to them and receive the proceeds from that auction, minus expenses.

That means your car could be worth $5K, but sell at auction for $2K. That’s why dealers like to go to car auctions. Like Joe found out, though, the IRS doesn’t base your deduction on what your car is “worth” now; they will allow only the amount it actually sells for.

Here’s an excerpt from IRS Publication 4303:

The amount you may deduct for a vehicle contribution depends upon what the charity does with the vehicle as reported in the written acknowledgment you receive from the charity. Charities typically sell the vehicles that are donated to them. If the charity sells the vehicle, generally your deduction is limited to the gross proceeds from the sale.

Notice, the IRS says your donation is “generally” limited, so be sure to read a current version of the publication for yourself to see if there are exceptions that would benefit you.

Following are some of the tax-related issues you should know about. Again, though, always verify the info and get professional advice as needed. These are my own take-aways, and I’m just a guy who hates to waste money.

  • Make sure the organization you choose is registered and approved as a qualifying institution. Here’s where to go for that information: IRS Non Profits.
  • Note that your deductible expenses can’t amount to more than 50% of your gross income.
  • Always get a written acknowledgement from the agency you donate to. You’ll need both a statement that the vehicle was received and a statement concerning the disposition of the vehicle.
  • If you accept a gift in return for your donation (a vacation package, for instance), the price of that gift will be deducted from the value of the donation.

The bottom line: there are a number of factors that contribute to how much financial value you’ll receive from your vehicle donation. Certainly, the ability to help fund a worthy cause is the best thing about vehicle donations. If you can do that, though, and still get significant tax benefits for yourself… why not get the most?

CC photo by lauramusikanski from morguefile.com

How NOT to Make the Same Mistake

Since your tax deduction is limited to how much your donation sells for, you’re going to get the lowest value if you give it to an organization that depends on auctions.

How do you know what will happen with your donated property?

Ask!

If you live in the Eastern United States, for instance, the Vehicles for Change organization finds families in need of reliable transportation and helps them get back (off) their feet.

A really cool thing about their model is that they also teach folks how to repair and detail vehicles. So they not only turn out cars and trucks that are clean and in good working order, but they prepare people with job skills in the process.

If you’re out west, look around for a similar organization. Find a charity that will put your car to good use instead of selling it at auction.

One more thing: no matter which route you choose to go, always look the charity you’re considering up via a watchdog tool like Charity Navigator. That allows you to find out how much of your donation actually goes to the people who need it.

Vehicle Donations – Here’s How to Get Maximum Tax Value – Wrapping it Up

It’s a pretty simple situation, really. The IRS closed the loophole for car donations. If you want maximum benefit for that car, truck, or boat you no longer need… then make sure it provides maximum benefit to the charity of your choice.

If you want to help the car lot, then take the lowball price they offer or give it to an organization that sells donated goods at auction.

Your choice.

Old People Make Great Chefs

Okay, don’t take this in the wrong way. I’m not digging at the elderly or trying to make any Walmart greeter slams. The truth is that many of us find retirement either limits our income too much — or just isn’t all we thought it would be.

You don’t have to be poor to work!

In her 2012 book, Great Jobs for Everyone 50+: Finding Work That Keeps You Happy and Healthy … And Pays the Bills, Kerry Hannon proposes some ideas you may not have thought of. Her suggestions definitely turned the lights on for me.

Here are but a few of Kerry’s suggestions:

1. Retirement Coach: Hey, you’ve “been there and done that.” Why not help others, who may be facing the golden years with more than a bit of fear, get lined out?

Coaching has become big business. The book says the pay can range from $50 to $400 per hour. Sounds to me like a bit more than Walmart ponies up … and you already have the skills you need: experience and compassion.

2. Nonprofit Fundraiser: Chances are that you have helped more than one organization plan events and raise funds in the past. Why not consider those talents as potentially launching a second career? Your age can be an asset when it comes to people skills. You know the ropes, and you are (maybe) beyond your sounds-like-a-sales-pitch years. Hannon says a good fundraiser can earn upwards of $80 per hour. I’ll take some of that.

3. Tax Preparer: You have courted Uncle Sam for a long time. Why not turn some of that experience into a paycheck? This work gets really busy between January and April 15, but there is work all year long doing light bookkeeping and helping keep folks ready for tax season. With pay running $30 per hour or more … why not?

My turn!

Since reading “Great Jobs for Everyone 50+”, my eyes have been opened to the possibilities. I see jobs us old fogies could do, just about everywhere I roam. Here are a few of my own:

1. Social Media Help: Companies need “buzz” … they need to get their brands spread around the webosphere. Why not learn the major social media platforms and tools — then use your skills to help others build their business? Almost every company, both local and national, could use help in this realm. Pay? Set your own price. It may be better to consider your work by the piece instead of by the hour.

2. Chef or Cook: What is the difference? Attitude! You’ve been cooking meals for a long time. If you are good at it, why not share the grub? Don’t want to work the long hours at a restaurant? Why not check with the local schools to see if they need kitchen help? Anywhere people eat, there is a potential demand for a good Chef.

3. Housekeeping: This one sounds tough, but when you are in business for yourself, you only need to take the jobs you want. Would an extra few hundred dollars each week benefit you at all? Do you believe it is a good idea to stay active? Why not combine the two? An average housecleaning job takes a few hours and pays $100 or more. Don’t want to clean someone else’s kitchen? Consider cleaning for local businesses after hours. Good pay. Call your own shots. Keep moving.

There is absolutely nothing wrong with working as a greeter at Walmart. It could even be fun. When you are considering the possibilities, though, do some research. Your age doesn’t have to work against you. Chances are good that your experience, wisdom, and work ethic will make you more capable of earning a decent income … not less.

 

Zoomers Emerge As Vital

Baby boomers, typically defined as those persons born between 1945 and 1964, number over 75 million Americans. Boomers, with their penchant for doing things their own way and bucking the system, maintain an important part of the financial and cultural engine of America.

As this generation moves more and more towards retirement, analysts are noting that an increasing number of baby boomers are not slowing down. This sub-group, dubbed “zoomers” by some analysts, are emerging as new trendsetters.

Baby Boomers who won’t quit

Zoomers, by definition, are baby boomers with zip and energy. They are planning and making decisions to better control their physical, spiritual, social, and financial future.

Moses Znaimer, the media expert who initially coined the term, sees zoomers as a vibrant and affluent community, filled with optimism, engagement, and aspiration. This positive outlook is reflected in both the types of activities zoomers choose as well as in what they can offer businesses in need of fresh perspectives.

Travel, physical exercise, spiritual retreats, and purposeful vacations are all part of many zoomers’ lifestyle. No longer is retirement or growing old considered a time to slow down. In fact, many zoomers report feeling younger and more engaged as they’ve aged.

This change in behavior and outlook from the previous generation opens up a world of possibilities for businesses in terms of marketing and product development. Zoomers have money and businesses need to market to them to capitalize on their vitality and financial strength.

Zoomers bring talent and wisdom to the world

In addition to being a vibrant market force, zoomers also are vast talent pool that helps businesses. As mature workers, zoomers offer experience, emotional maturity, and loyalty in the workplace.

They typically have a breadth and depth to their skill sets; these skills include technical expertise as well as collaboration and relationship-building abilities. In fact, it is the non-technical expertise that many businesses need help with and zoomers offer a chance for businesses to tap into a burgeoning population of potential experts.

Business owners and hiring managers can tap into the experience and knowledge base of zoomers by shifting their perspective on job recruitment. Foremost amongst this shift is a focus on skills, not age; older workers offer maturity and the potential for more mentoring relationships in the workplace. Companies need to identify and create benefits and incentives that appeal to the needs of a variety of generations, both the more recent as well as the aging. Learn about what is important to zoomers and you can better recruit and retain them in your own company.

“Retirement” isn’t part of the plan

Zoomers, as a subset of the baby boomer generation, are redefining the way Americans “retire.” With their focus on staying physically active, mentally sharp, and spiritually alive, this emerging demographic opens up new possibilities for businesses in terms of both marketing and recruitment.

Zoomers typically have money to spend and businesses can tap into those finances with marketing based on an understanding of this group and their needs. Additionally, zoomers are good workers, with fierce loyalties and strong work ethics. As such, they can make excellent hires in the right situation.

Companies that understand zoomers and how they can best integrate into the workplace have a chance to separate themselves from the competition. Zoomers, with their zip and drive, continue to shake up the marketplace.

When You Die, Who Divides Your Estate?

When you, or someone you know dies, a lot of attention is placed on the will. Yet, arguably more important than the will itself is the decision of who becomes the Personal Representatives of the deceased and, thus, legally in charge of overseeing the will.

Normally, this is outlined in the will itself. Those listed as Personal Representatives or Executors will be given Grant of Probate. However, it’s also worth noting what happens if there is no will, or if no Executors are listed within. Whether you yourself are writing a will, or someone close to you may not have any named Executors, it’s important to be aware of what happens. When there is nobody to give Grant of Probate too, intestacy rules determine who receives a Letter Of Administration, as well as who receives what when dividing up the estate of the deceased.

Understanding Intestacy

The important part of intestacy is that it follows a strict order of family. Not everything goes to the direct-most relative. As such, an in-depth working knowledge of the family tree would be ideal. In any case, the rules of intestacy are very complex and professional assistance is always advisable. None the less, there are a few aspects you should at least be aware of:

  • The exact situation can vary, but the spouse usually gets first priority, with parents and siblings of the deceased closely following.
  • Under a certain amount, depending on the situation, the spouse will receive everything.
  • When passing out remaining estate, due to a lack of spouse or direct family for instance, the estate is given to the next ‘class’ of kin. The closest ‘class’ with a living relative, as of the intestate, is the one that receives the estate.
  • The system also works ‘per stripes’. If someone would inherit a share, but they themselves are deceased, their share is given to their relatives.
  • If no identifiable kin are found, it goes to the state.

What isn’t covered?

The rules of intestacy were created in 1925. Whilst a lot has changed since then, the rules themselves have not. As such, there are a number of parties that are not included. Without a will or designated executors, the following may not receive anything should you die intestate:

  • Unmarried couples, even if living together, cannot receive each other’s estate upon their death. Of course, this will be different if the property or possession in question is in a joint-name. Sole ownership, however, will not be transferred to an unregistered partner through intestacy.
  • Step-relatives are not considered via rules of intestacy. This includes step-children, step-siblings and step-parents.
  • Friends and other non-relatives, including charities and other organisations, will not be included. Rules of intestacy focus very heavily on blood relations.

The sure cure to avoiding any problems for your loved ones is to get professional advice and leave a will.

 

 

Boomer Entrepreneurs

According to the 2011 Kauffman Index of Entrepreneurial Activity, Baby Boomers are instrumental in starting new businesses–and the number of entrepreneurs, aged 55-64, has increased significantly (from 14.3% of total new USA businesses to 20.9%, comparing 1996 to 2011).

Boomers are also showing high scores for optimism and for a desire to maintain health on into their senior years. What can you say, but “Boom Alive!”

Baby Boomers: The Pig in the Python?

Pam Hardy makes some interesting observations about the differences between the USA and Canada–even suggesting Boomers and young folks consider economic opportunities in the Northland. Read that story on the Cleveland Live website.