I donated a car last year and when I filed my taxes they didn't count it! help!?

Question

When I did my taxes (at HR block last February) they didn't count the car I donated. It was worth $4,060 at the time of donation and in good working condition. I kept the receipt and am now wondering if they made a mistake? If not, could someone (like a CPA) explain to me why they didn't count this large donation?

Thanks!

Answer 1

Often I don't include donated cars on people's tax returns. Why? It doesn't help. If you normally don't do a Schedule A, it means your Schedule A components don't add up to more than your Standard Deduction. For example, if you were married in 2005, your standard deduction was $10,000. For the car donation to change your tax return, it, along with everything else on Schedule A, would have to exceed $10,000. If they all added up to only $9,700, then no dice. Of course, you could insist that your use your Schedule A instead of your standard deduction, but you'd end up owing more taxes.

One more thing, if your tax preparer truly had your best interests in mind, then even if your Schedule A exceeded your standard deduction, but only by a small amount, it is possible the additional refund you would have gotten would NOT have made up for the costs of filing out all of the extra forms. H&R charges so much for the Schedule A. If your refund would not have made up for the charges, you are better off not including them. That is what I do. I don't include additional forms when my charges exceed your benefits (unless the forms are necessary).

Starting in 2005, you could not simply tell the IRS what you thought the car was worth when it was donated. You need to wait until the charitable organization sells the car. You enter whatever the organization got for the sale. To make matters worse, if they had to put money into the car before it was sold, you have to subtact that off of the sales price (they will do this for you). The final amount is usually much less than what you thought the car was worth. This is a nasty new trick congress played on us...but it does prevent people claiming $8,800 for a 1983 Aries K.

After saying all of this, it is possible your tax preparer made a mistake. We are all human. Take your entire tax return (they should have stapled everything together and put it in a nice folder) back to the tax office where you had it prepared (or any H&R office for that matter) along with your car donation information and ask to speak with a senior tax preparer. Show them them your info. If a mistake was made, they will fix it totally for free and submit an amended return. The IRS will send you the difference PLUS INTEREST! H&R may even refund your 2005 tax prep fees or give you a discount on your 2006 return. If a mistake was not made, ask them fully explain why the car was not included. Ask questions until you are totally satisfied....after all, you paid for their service.

I hate those commercials that say "Donate your car and SAVE TAXES!" They always have small print that says "See your tax preparer". The unfortunate truth is, most non-wealthy people who don't normally do a Schedule A rarely save a red cent donating their car. Usually, only people who normally do a Schedule A (usually people who own their own house or make a lot of money) save by donating. And when you do save, you only save a percentage of your donation. It is just like giving money to a church...if you are in the 25% tax bracket, you only save 25% of your donation. Give $1000, save $250 in taxes.

If you are giving the car away because you really want to help the charity, then by all means, make the donation. If you are doing the donation because you want to make some money on the car, then by all means, sell it yourself. You are bound to make more on the sale than you will save in taxes...even if you sell it for 1/2 of its fair value. That is something you won't see on those damn commercials.

Answer 2

After donating my car I met an old friend that recommended me to CarDonateHelper where I found all needed information right away. What a bummer that I did not met my friend earlier; I could have avoid so much research. Here you find as well a check list to make sure your donation gets considered by the tax office.

I am sure you will find as well a your solution and all information you need at http://checklist.cardonatehelper.org

Just use the Search box on the right in case the right information are not displayed immediately.

oh yes, this works even in Texas :)

Have fun with your research and even more with the results of your donation - sharing just make more happy than anything else :)

Take care!

Tarsha
It's Official: Sharing Makes Us Happier!

Answer 3

If, you feel there may have been a mistake. Get your 1040 form out and work the math, inserting the Charitable Contribution and see how it pan out. If, you find you were due more refund. Get a 1040X and refile adding the Contribution. CPA's and H&R Block are not perfect, they can make mistakes. I refiled for a lady who used a CPA, but, it was actually her fault as they put her Self-Employment income on the wrong line, but, the CPA should have explained this section also. She got back an extra $750!!!!!! The IRS was very helpful and worked with me, so, she paid her Social Security out of this too.

Answer 4

1) The rules changed a while ago on car donations. You should have received a 1098C from the charity after they sold the car at auction. That is, if they sold the are at auction. You can only deduct to value that they received for the car.

2) Is it possible that, even with the car donation, you still did not have enough to itemize? Charitable donations are an itemized deduction along with mortgate interest, state taxes, medical expenses, etc.

Answer 5

Unless you had itemized deductions (including the donated car) that exceeded the standard deduction, they were correct in not claiming the car as a charitable deduction. If that was your only itemizable deduction, you would have paid more tax by itemizing.

Answer 6

Check with an accountant. However, if the deduction is correct, you should be able to file an amended form 1040-X to claim the deduction.

Answer 7

TaxMan has my vote for Best Answer, but I caught 1 error in his answer. The IRS only pays interest if a return is delayed because of something they did (or failed to do). Any amended return in not an IRS error, so they won't pay interest.