IRS rules are tougher, but you can still donate your car
Many unemployed Twin Citians can’t get or keep jobs
because they have no good way to get to them.
Fre-quently the available jobs are located in areas not
serviced well by public transportation. The only area
faith-based program working on the issue is Wheels to
Work, a nonprofit organized in 1997.
The organization operates under the theme
“Encouraging self-reliance through mobility.”
The heart of the Wheels to Work program is the
donation of used but still-serviceable automobiles.
One in 7-10 donated cars is considered suitable for
use by people referred by various social programs in
the Twin Cities. The remaining vehicles are sold at
auction to finance the program’s costs. Since its
inception, Wheels to Work has presented 446 cars to
persons needing transportation to get to work.
Wheels to Work aims to provide cars that are in good
working order and should not require major repairs
within two years. Cars that need some repairs prior to
re-donation are sent to auto repair garages that
perform the needed work at a discount. Wheels to
Work also takes care of any cars that end up with major
repairs needed within two years.
Potential recipients of the cars need to be able to
demonstrate a level of stability in their lives. As part of
its program, Wheels to Work counsels potential
recipients of cars on insurance and operating costs —
and how to budget for them. That’s according to Warren
Camp, a retired school teacher who has worked
part-time with the car program since 1999.
Unlike most car donation programs in the Twin Cities,
Wheels to Work does not use brokers in handling car
donations and the sale of vehicles not retained for
donation to people needing transportation. Generally
that means car donors get a bigger tax deduction than
they would through other car-donation programs.
Since the beginning of 2005, there’s a new wrinkle in
the rules governing how the Internal Revenue Service
treats car donations. Up through the last day of last
year, donors could claim full market value for donated
cars up to $5,000 (or the appraised value, if over that
Now, donors can claim a deduction of up to just $500.
The law is more demanding on any claimed deduction.
An organization receiving a donated car must provide
written acknowledgement of the contribution within 30
days of the sale or contribution of a vehicle. That
acknowledgement must be included by the donor when
filing a tax return.
If the organization sells a donated car, then the
deduction is limited to the actual sale price. If the
organization donates the car to a needy individual, the
donor is entitled to deduct the fair market value of the
Camp said that the car program helps people connect
with available jobs. He explained that, for some single
moms, dropping a child at day care and taking public
transportation to a job can require up to two extra hours
both morning and evening. That means a long day, and
unneeded extra aggravation for people who might
already being living with some stress.
Wheels to Work re-donated 111 cars to recipients in
2004, surpassing its goal of 110 cars per year —
despite a decline in the total number of cars donated to
it, due to the IRS ruling on tax deductions. However,
achieving that goal put a pinch on Wheels to Work
finances. The operation’s three part-time workers cut
their hours and other cost-saving measures were
taken. “Unless car donations pick up, our program is in
jeopardy,” said Pat Peterson, a member of the
organization’s board of directors.
One way individuals who don’t have a car to donate to
Wheels to Work can participate is through cash
donations. Sometimes an individual or an organization
within a church will sponsor repairs to a car scheduled
for re-donation; those repairs average about $1,000 in
cost per car, Peterson said.
Area church members are the primary source of cars
donated to the program. Church bulletin
announcements and church newsletters are the main
way the word gets out regarding the need for used cars.
Peterson explained, “If people of faith are willing to
donate a car, we would like to believe they would be
inclined to give to a program that is itself faith-based.”
* * *
For additional information about Wheels to Work, or to
receive a brochure explaining how the current IRS
regulations treat car donations, call 952-881-1115. Or,
check the Web site at www.wheels-to-work.org.