Sounds simple: Just donate a used vehicle to charity, don’t bother with the hassles of selling it, score tax deductions, and everyone wins, correct?
Not always. The road to hell can sometimes be paved with the best of intentions, and it can also be in many cases surprisingly simple to stumble into this well-meaning situation.
But before you give one of your vehicles to anyone, read these tips to assure that you’re doing it right.
1. Avoid car donation middlemen. You’ll find many great options on the top and left of this page for non-profit organizations that advertise with aggressive tactics on TV, radio, billboards and elsewhere, who will help you to make your donation of your vehicle in order to benefit charities. The catch in some cases is that some of these groups keep up to 90 percent of the proceeds from the vehicle’s sale for themselves, so that the specific receiving charity doesn’t receive much of what they could have received. In order to prevent this, click several of the options on the left and speak with them directly to determine whether they will give a large portion or what amount exactly goes to the charity.
2. Find a worthwhile charity. If a charity you typically support isn’t equipped for accepting vehicle donations, take a minute to do a little homework to find a good and reputable organization that is a charity.
3. Check the dollars and deductions math. If you’re ready to work with an intermediary charitable assistance organization – it’s not a bad option, and could be because you’re busy – at least question the group as to how much value will end up going to the charity.
4. Know the tax status of your charitable recipient organization. To qualify for a tax write off, the charity who receives your vehicle donation has to be IRS-approved as a 501(c)(3) organization. However, if they’re a church, synagogue, mosque or temple then they’re going to qualify unless they’re a scam, and you wouldn’t be going to that church anyway if it were!
5. Do the vehicle delivery yourself if you can swing it. After you have identified a charity, realize that they more they pay to a group to pick up your vehicle for you, the less they receive in funds. So if you can assist the charity in maximizing the benefit received from your donation, just drop off the car, boat, or other vehicle yourself. Of course, if you can’t, or don’t have ability, don’t sweat it, they’ll still be glad to schedule a free pick up to get your vehicle.
6. Transfer the title of vehicle carefully. So you wanna eliminate the risk from running up tickets from poor parking or other violations once you’ve sent off your donated car? Of course you do! So re-title the car to the receiving charity, so that you can report the title transfer to your state’s DMV. Don’t agree to just leave ownership blank on the charity donation receipt.
7. Keep a good paper trail for your car donation (or other vehicle donation). If your vehicle donation will likely sell for over $500, you will need to attach IRS Form 8283 onto your return. If it is going to probably be worth over $5,000, your proper documentation should include a detailed and certified outside vehicle appraisal in order to get you the maximum vehicle donation deduction and make sure you don’t get into trouble with the IRS or owe back taxes later. Although this keeping of a good paper trail can seem like a bother and be cumbersome, remember: It may turn out as one of your biggest charity donations that you have made to date and by making sure you dot the i’s, you’ll be making sure the charity receives the most maximized benefit as well as assuring that you will receive the greatest possible car donation deduction.
More From Car Donations
- Finding Charities to Donate a Car for a Tax Deduction
- What’s my Car Worth if I Donate it to Charity?
- How Much Can I Deduct for Donating a Car
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