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Better Business Bureau Offers Advice on Vehicle Donations
The Better Business Bureau offers general advice to people who want to make vehicle donations:
* Do research and ask professionals for help.
* Seek legal and financial advice before you donate your car. Does it make financial sense to donate your vehicle? Is the charity able to meet your giving needs?
* Get the charity's annual report and read it. Find out how the charity managed its budget in the last fiscal year, including how it spent income from vehicle donations.
* Ask the charity how it uses donated vehicles. Does it resell them at wholesale prices? Or does it refurbish the vehicles for disadvantaged families that need transportation?
* Get receipts. Make sure the receipt has the registered charity's identification number on it.
* Check with your state Attorney General's Office to make sure the charity is registered as a 501(c)3.
* Contact the Better Business Bureau to find out if it has information on file about the charity and its vehicle donations.
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Get a written appraisal if your car donation is worth more than $5,000.
Donate Car For Charity Tip: Donating a car is easy to do, but if you intend to claim a deduction over $5,000 for vehicle donations, you must obtain a written appraisal of the donated property from a qualified appraiser. This must be accomplished prior to pick-up of your vehicle. Further, you must complete IRS Form 8283, Non-cash Charitable Contributions (http://www.irs.gov/pub/irs-pdf/f8283.pdf) and forward a copy to the charity or donation program. In this situation, a signature from qualified car donation organizations or vehicle donation programs is also required.
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Ask Questions Before Making Car Donations
Many major charities accept car donations, letting people donate used vehicles for a good cause and get a tax write-off in return. But the process is not as simple as making a phone call, dropping off your unwanted vehicle and reaping the benefits of a tax write-off. First, learn the charity's mission. If you have a specific intent in mind for the gift, let the charity know. If it cannot meet your goal, you may want to consider other ogranizations. Charities may use car donations in their charitable work. For example, a car donation may directly help needy people with transportation. Most likely, the vehicles will be sold to raise money for the charity's programs or general fund. If the vehicles are sold, find out which programs the revenues fund. Perhaps the money can go to a particular charitable service or cause you support. Finally, ask if the charity oversees car donations or pays a firm to do it. If a for-profit company handles the vehicle donations, find out how much money the charity will receive from the sale and how much will go to the for-profit company. This kind of information may help you direct your car donation to the charity and cause that match your interests and goals.
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Charities May Hire Firms to Run Car Donation Programs
Donate Car For Charity Tip: If you plan to donate a car, first research vehicle donation programs in your area. Then choose the type of program that suits your interests. Some vehicle donation programs are clearinghouses for car donations. These organizations often work on behalf of many charities.
The companies are paid by the charities to manage their vehicle donation programs. They collect and sell the car donations, taking part of the sales revenues. The rest of the money goes to the charities the organizations represent.
The tax deduction a donor can claim is the amount the charity receives in gross proceeds from the sale, if the vehicle is valued at more than $500. Some charities run their own vehicle donation programs, though they are likely to be larger nonprofits that can afford the costs of managing car donations. In-house vehicle donation programs tend to bring in more funds for the charity and the causes it supports.
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Car Donation Services Benefit Donors in a Variety of Ways
What are you looking for in car donation services?
If it is simply speed, convenience and a program that will take an inoperable car, you may want to contact a national clearinghouse that represents a lot of charities.
These companies specialize in collecting just about any vehicle, no matter the condition. The companies will tow away and sell junk cars for their parts.
If you are seeking a charity than can make full use of your vehicle donation, you may have to do a little more work.
Check with your local United Way or Attorney General's Office to find a list of registered charities in your community.
Call the ones that interest you, and ask a lot of questions. Make sure the charity will use the donation for the services you want to support.
You may want to avoid charitable organizations that have high overhead costs for their vehicle donation programs. The high costs mean less money for the charity's programs and services.
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Be sure you give to a qualified charity if you want to deduct your contribution.
Donate Car For Charity Tip: Before telling yourself, "It's time to donate my car", make sure that the car donation program to which you wish to give is a qualified, eligible car donation charity. If it is not a qualified organization, donating cars to them may not be tax deductible. Donors can use the IRS web site to check whether an organization is qualified: search Publication 78, an annual list of most organizations that are qualified to receive deductible charitable contributions. You can also find Publication 78 in many public libraries. Or, if you prefer, you can call IRS Tax Exempt/Government Entities Customer Service at 1-877-829-5500 and ask if the charity is qualified. Be sure to have the organization's correct name and its headquarters location, if possible.
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How to Calculate the Car Donation Tax Deduction
The IRS only allows taxpayers to use the fair market value for a car donation tax deduction, when certain conditions are met.
The car donation cannot be worth more than $500 to receive a car donation tax deduction. Or, the car donation has to be used directly by the charity in its programs or services.
For example, if a charity uses a car donation for its meals-on-wheels program, the donor may be entitled to claim the car's fair market value as a tax deduction.
But the vehicle needs to be in proper condition for the donor to assign fair market value.
Be careful. Your used car's value may not be as high as the listing in area pricing guides. High mileage and the vehicle's condition may lower the value.
Check with the IRS to learn more on figuring your car donation's value at tax time.
Two publications may help: IRS Publication 526, "Charitable Deductions," and IRS Publication 561, "Determining the Value of Donated Property."
The guidelines make it easier for taxpayers to follow car donation tax law when giving to charities.
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Expect to Itemize Your Boat Donation for the IRS
Donate Car For Charity Tip: When you make a boat donation -- or any vehicle donation -- there is some extra work involved if you want the tax write-off. Most Americans do not itemize deductions when filing their income taxes, but if you make a boat donation and want the tax deduction, you will have to do the paperwork. - You must itemize your boat donation on Schedule A of IRS Form 1040. - If the boat donation is valued at more than $500, you also will need IRS Form 8283 for "Noncash Charitable Contributions." - Fill out this form and attach it to your tax return.
Don't be intimidated by the paperwork. Help is at hand. Often the charities provide easy-to-follow directions on accessing the necessary forms. It's always a good idea to consult with an accountant or seek help from the IRS, which publishes free taxpayer guides. Its Web site is www.irs.gov.
