Donate a car to charity and get a great tax deduction and free up some garage or driveway space. This may sound simple enough but before you hand over that car or truck consider these useful tips.
Stay away from the middlemen: When you watch TV you might notice commercials by various organizations offering to help you donate your vehicle to charity. Sometimes these organizations will even offer you cash for the donation. The thing you need to know is that if you let these organizations help you they will usually keep 50%-90% of the profit from the value of your donation. Instead, what you can do is contact the charity of your choice directly to see if they accept car donations. Most reputable charities will accept your car as donation. Doing this gives your charity the maximum benefit and you get the biggest deduction possible.
Get to know your charity: If you decide to donate your vehicle to charity and want a tax deduction make sure to do some research on that charity. In order to get a tax deduction for your donation the charity you donate to must be an IRS-approved 501(c)(3) group. Some examples of qualify organization are churches, synagogue, and temples.
Take the time to transfer the vehicle: When you donate a vehicle it is best that you report the transfer to the DMW and re-title the vehicle to your charity. Also, remember to never leave or agree to leave ownership blank on the charity donation paper. Taking time to do all of these things will eliminate your risk of violations once you hand over your vehicle.
Always keep files of your donation: When you donate a car and the car is worth more than $500 you will need to include with your tax return IRS form 8283. If your donation is worth over $5,000 you will need proof of the donation. This proof can be a receipt from your charity or a copy of the title change.
Do your homework: If you are too busy to do the donation yourself and have to resort to an organization to help you – make sure to ask the organization how much of your donation will go towards the charity. The amount that goes towards your charity can affect your eligibility for a tax deduction. For example, you’re donation is worth $2,000 but the organization only gives to charity a flat fee of $100.00. This amount will probably not let you be eligible for a tax deduction.