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A prime example of how charitable donations work and save the taxpayer money is the act of donating one's vehicle to a charitable organization. This generous act not only saves the taxpayer some extra cash come April, but it also helps a number of charities across the country. Charities can either use donated vehicles for their own use or they can auction them off in order to use the cash to help those in need. Either way, the charity is getting great use out of the old bucket which was just a nuisance to someone else.

Rules regarding donations have changed drastically over the years. In previous years, all one would need to do in order to donate a vehicle was to claim the market worth of the vehicle to the charity receiving the donation. They would then give you the paperwork necessary in order to claim the donation in one's tax returns for that year. However, in more recent years, this system has changed thanks to people who had been abusing the chartable donation tax breaks. People wanting to cheat on their taxes had been claiming their cars to be worth more than market value; this then ended up costing the government millions of dollars. New restrictions limit not only the owner, but also the charities receiving the donations as well. The actual deductible amount now depends on the worth of the vehicle, along with how the receiving charity uses that said vehicle. All vehicles, including not only cars but also used panes and oats, are more limited as tax deductions when they exceed the amount of $500. Today, if one's vehicle is worth more than $500, the actual tax deduction is based on how much the charity actually sold the vehicle for. However, there are some loop holes which allows tax payers to receive the full value for the vehicle. Kay Bell explains that is one's vehicle is used in a progressive way by the charity; donors can file for the original value of the car. If one donates one's vehicle, notice of the eventual fate of that vehicle must be received by the charity which received it within thirty days. One must also include proof of the donation with one's tax returns, when "previously, such receipts were generally only kept by the taxpayer in case the IRS questioned the claim deduction," (Bell 2007).

Donations do save you money on your taxes. However, they are in the form of small deductions in relation to one's gross income and don't do much on the scale of everyday life for the taxpayer. These breaks are more for encouragement. The idea is not only to encourage donations, but to also give small rewards to those who do make the decision to donate items in order to help charities around the country.