If you're thinking about donating a car to a charity you may want to keep the following tips in mind. A car donation tax deduction can benefit not only you and the charity but a person in need also.
Charities have the option of using donated vehicles for their own use, for providing transportation for volunteers or for charity-related activities such as picking up supplies etc. But more often they will already have enough vehicles and they will sell the auto, truck, RV, airplane or other vehicle from their car lot or through dealers to raise funds for their charity. If the charity uses a dealer they've contracted with, the charity may only receive $50 or less from the dealer when the vehicle is sold.
Changes in the laws limit the amount the donor can receive for a used car donation to the actual price that the charity sells the car or truck for.
If the charity or car donation program is not familiar to you, you may want to make sure the charity is eligible from the IRS to receive tax deductible contributions. Request a copy of the charity's letter of determination from the IRS. This letter verifies the charity's tax exempt status.
Make sure that the charity or car donation center gives you an itemized detailed receipt for your car donation. Keep it in a safe place and file it with your tax return. Non-cash donations can be an unwanted red flag for an IRS audit so make sure you document the value of the car and keep good detailed records.
If you discover that your old used car is worth more than $500 then you as the donor must fill out Section A of the IRS Form 8283 and file it with your income tax return. Make sure you get a written acknowledgement along with the receipt from the charity because you'll be required to do so.
If the charity turns around and sells the car instead of using it for transportation then the charity must give the donor certification that the car was sold at what is called "arms length" between parties who are unrelated. And after the sale report the sale price of the car to you within at least 30 days. The donor's car donation tax deduction will be only for the amount that the charity sold your car for. And if the charity doesn't sell the car and elects to keep it, then it must give you, the donor, a written receipt for the vehicle within 30 days of the date of the sale.
The charitable car donation organization might also be required to provide certification to the donor showing how it plans to make use of or improve or repair the car or other vehicle and also that it promises it won't sell or transfer the car to another person or company.
In the US, the federal government imposes penalties on charities that provide fraudulent acknowledgements or documentation to donors.
If the car, truck or vehicle you plan to donate is worth $5,000 or more, then an independent appraisal is required and you must fill out Section B of IRS Form 8283. You ma have to get advice from your CPA or accountant on how to handle this.
If you think or know your car or truck or other vehicle is worth less than $5,000, you can use the Kelley Blue Book or a little guide book from the National Auto Dealers Association (NADA) to figure out the market value. You can find these guides online or at your local public library. You must use the correct figures for the mileage, date and exact condition of your car - document this as much as possible. Choosing the highest figure listed in the guide for your car model and year without taking into consideration any of the other options and factors will not make the IRS very happy.
Take several current pictures of the car or truck and save all your vehicle receipts for new tires, repair work, or any necessary upgrades to help prove its value.
It's important to remember, that you as the donor, not the charitable organization, are responsible for determining the value the car. It is you who will pay any penalties if the IRS challenges your figures through an audit.
There are many reputable lesser-known as well as the more well-known charities such as Target, Purple Heart, Kidney Foundation, Salvation Army and Goodwill Industries. Centers are located in every state including Massachusetts, California, Minnesota, New York, New Jersey, Michigan, Illinois, Connecticut etc. Some of the charities in some states seem more active in pursuing the donations than others and you'll find more ads.
These are just a few of the best tips you should know about if you plan on donating a car, truck, RV, airplane, boat or other vehicle. Armed with these facts you can start to make an educated decision about whether you want to go ahead and donate a vehicle and get a nice car donation tax deduction.
Author Resource:-
For more tips on choosing the best charity car donation, car donation program, used car donation or charitable car donation online and offline go to http://www.Car-Donation-Info.com for charity and tax deduction tips, help, facts, reviews, including information on all types of car donation
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