Is it time to get rid of that old car, boat, or other motor vehicle and you don't want to go through the hassle of selling it. It used to be easy to avoid that hassle by donating your car. But today, the tax waters are a bit murky. For example, what if you donate a car over five hundred dollars. Or they use the car for a few months and then sell it. How do you make sure you are getting a fair tax write off and helping a good charity?

The first snag you'll run into when you try to donate your car to charity and write it off is the five hundred dollar limit. Any vehical donation with a value of over $500 gets complicated. If the charity sells your $1500 car for merely $800, then you can only write off the $800 amount. The charity must let you know within 30 days of either selling your car or when you turn it over the amount you can write off. You must include this amount in what is called a copy of acknowledgement from the charity with your tax return. In previous years you just had to keep a copy of it in case you were audited.

There are however, a few loop holes to getting around the $500 dollar limit which includes the intervening-use exception. This exception applies to cars that the organization or charity use in their day to day operations. Intervening use examples include: a food bank driving around food to the needy, the car used in vocational training, driving people to the doctor, or driving voters to the voting booth.

In order to claim intervening-use exceptions you need documentation from the charity for the price the car eventually sold for, if it was sold, as well as the way in which the nonprofit used your car. With both these in hand you can now claim the intervening use exception.

Another exception is the when the vehicle is sold for less than market value to a needy person. However, be careful because the IRS has been cracking down on claims that the car went to an underprivileged person to claim the full market value on the car. Once again with proper documentation from the nonprofit you can claim full market value if the car went to a needy person.

While general tax laws do apply, there are few Gotcha's associated with donating your car. The first of which is timing. All charitable gifts must be made before the December 31 deadline to apply to the previous tax year.

Another gotcha to watch out for is that many groups accept gifts of vehicles, but not all of them qualify as one in which you can get a tax write off from. Many of these organizations are actually con artists and never end up going to good causes. If you have any questions please contact me via the contact link in my profile. As always you should ask for copies of the group's federal tax-exempt status documents. You can also check the IRS's Web site directory to see if the charity is on the approved list.

Another gotcha to be careful of is that you must itemize your claims instead of claiming the standard deduction. That means a bit more paper work on your end including filling out Long Form 1040 and Schedule A. If the standard deduction is greater than an itemized list, then maybe itemizing your taxes may not be worth it. However, often times the value of the car will push you over the standard deduction and make filling an itemized tax return worth it.