Although laws have changed, donating a vehicle is this is still a good way to help yourself and others, too.

In 2005, the laws changed regarding tax deductions on boats, vehicles or airplanes that are valued over $500. Now, the charity must provide written documentation or acknowledgment within the 30 days of processing your donation. If the charity gives an exaggerated or false statement, it can be fined or otherwise penalized.

Under the January 2005 rules, your tax break is based on how the charity uses the donated vehicle. If the car is sold, the gross sale price can be deducted. If the charity uses the donated car following the new law for "significant" charity work that is tax approved, you’ll be able to deduct the market value of the vehicle.

However, severe penalties will be charged for falsified documents, and the tax agenciescarefully monitor charities involved with car donation.

Even though the old laws were problematic, many charities are skeptical about the new car donation laws. A lot of organizations are concerned about what might happen when the responsibility of tax deduction is put under the authority of the charity rather than the donor.

Some of them have actually sent a letter to the Treasury Secretary that suggests people may be discouraged from donating cars if they aren’t aware of the deduction amount that will be allowed. This, they fear will mean that some donors will be lost. Charities feel that donors must be able to weigh the cost of benefit in order to know if it is enough for them.

If you decide to pursue car donation, the process is easy. You can contact most charities by phone or online. It is important to ask your chosen charity specific questions to understand the process and avoid complications.

The process of donating a car isn't difficult, but it requires you to fill out some important information and get the car ready.