My Personal Finance Journey

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8 Profitable Year-End Tax Moves

Contributed by mm | November 30, 2004 3:17 PM PST

I always believe active management of one's tax is a good virtue. Year-end tax management is crucial: a few wise moves can probably pay a significant part of your holiday bills. Take a look at this CNN Money article to get some tax tips.

While some of the tips are cliche that apply to every year, you might want to pay special attention to the charitable donation section. That is because IRS will change the rules for donating cars. Instead of allowing donor to deduct the full value of the car based on KBB or other third party price guide, starting next year donor can only deduct the amount that the charity sells the car for. Seattle Times gave a great example on this topic.

"Here's how it will work:

Now: A person donating a 1993 Ford Taurus GL that's in good condition and has 110,000 miles on it could deduct $1,335, which is the value listed in the Kelley Blue Book.

After Jan. 1: The tax break for the same Ford Taurus probably would be limited to $300, which is the price some similar cars have fetched on resale by charities.

People who have donated their cars to charities said the tax change would make them less likely to do so again. Instead, they said they would try to sell the automobiles themselves."

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