1. First it's important to know that the laws were changed in 2004 limiting the donor's used car donation tax deduction to the amount the selected charity ends up selling the car for.
2. You want to find out if the charity is rightly eligible to be the receiver of tax deductible contributions so make sure that you ask for the organization's Internal Revenue Service's "Letter of Determination." This will verify their status.
3. Make sure to get a good well-documented receipt from the charitable organization for your vehicle or car donation.
4. In order not to send up any red flags on your income tax return know that the IRS looks carefully at non-cash donations so make sure to clearly document the correct car or vehicle value and keep accurate detailed records.
5. If your used vehicle is worth $500 or even more, then complete the newest Internal Revenue Service tax deduction form, the number may change form time to time, fill out the proper portion and attach it to your income tax return. You must also include a written acknowledgement from the charity.
If your charitable organization sells your donated car, then they must provide you with the sales price within 30 days with a certification the automobile, truck, van or other vehicle was sold at between parties not related to each other. The donor's tax deductions must be limited to the total the charity sold the car or vehicle for. If they don't sell the car, they must provide you, the donor, with a receipt within approximately thirty days of the sale, whenever that occurs. They must also certify to the donor how it intends to use or upgrade/repair the car and state in writing that they will not sell the vehicle or transfer it to any other party.
6. If your car is valued at $5,000 or more you'll need to get an independent appraisal and complete the appropriate part of the Internal Revenue Service form.
7. For cars or vehicles that are worth under $5,000, use either Kelley Blue Book or a guide from NADA to determine the current market value. Use the right and correct figure for the date, mileage, and car's condition. Don't just pick the highest figure for your vehicle year and model and not note other important factors. The IRS will look down on this.
8. Take several close-up pictures of the vehicle inside and out.
9. Save all your receipts for any upgrades including any new tires to document and verify the car or vehicle's value.
10. It's important to know that it's not the charity or charitable organization, who is obligated to come up with the correct value and you'll have to pay any penalties if the IRS audits or challenges you and finds your figures are unfounded.
Finally be aware that some charities use a donated car or vehicle for transportation or for hauling and they benefit directly from the donation. But in most cases the vehicles or cars are sold by the charity, dealer or car donation center to help raise funds for the charitable organization. When this happens, if it's the dealer, the charity may get only a flat fee and may be as little as $50 for your used car. So check with the charity on how they intend to handle the donation if this is important to you.
These are some of the best charity car donation tips you can put to use immediately if you're considering donating a car, truck or other vehicle to a charitable car donation program.
In the past few years many charities have found they can raise money through car donation programs and provide you with a car donation tax deduction. These programs can be a goldmine and the charity can make a lot of money for its charitable activities. They stand to make a lot more money if they do all the management themselves. However they must manage it correctly.
Many charities prefer to hire companies that specialize in handling car donations. They charge fairly high fees however. In some cases the charity may only earn 60 cents on the dollar or less, for example.
Most people have no idea that the charity actually ends up with a lot less money than they think. The donor may never find out exactly what this figure is.
If you're thinking about donating a car, truck, RV, boat, or any other vehicle to get a good tax deduction, you'll want to check the charity out thoroughly first. Call them up and ask if they handle their own program or if it's farmed out to one of the many charitable car donation programs. You may have a specific charity in mind.
This doesn't mean you shouldn't go ahead if they don't handle it themselves but just know they won't end up with all the money either. Many charities are not in a position to do the management and all that's entailed in handling the vehicles.
Don't be afraid to ask the charity a lot of questions. You want to be certain you know how much the charity will receive and what they plan to use it for. Sometimes charities sell the vehicle and don't actually get a lot of money for the vehicle. Sometimes it's given to a needy person. Sometimes it's used to transport charity goods to and from various locations. Find this out if this is important to you.
There are many well-known charities that are looking for charitable car donations. You want to ask these charities these same questions also. These charities include Target, Purple Heart, Kidney Foundation and Goodwill Industries for example. There are many others. Many charities have their own used car lots and have salesmen selling the donated vehicles.
If you donate using one of the charity car donation programs instead of working with the charity, you need to know they handle the donated cars, trucks and other vehicles for several or many charities not just one.
Make sure you proceed carefully if you decide to donate your car or other vehicle. It's a good way to support a charity, or your favorite charity if they have a program, and provide you with a great car donation tax deduction. Just make sure you know that the donation may not end up bringing in the amount of money you might think, if it's sold.