WIN BY GIVING! DONATE OLD CARS TO CHARITY

2007-03-08 10:33:40

( Charity )



Wondering about what you can do with your old car? Maintaining it has become expensive and you're unsure if selling it will get you a good deal. If you donate a car to charity, you can help others and get something in return. That's because people who donate old cars can qualify for an IRS tax deduction.

Making car donations is a fairly simple process. However, there are several guidelines you must follow, since not all car donations can qualify for a tax deduction.

How to donate a car

Make sure your charity is a qualified organization before you donate old cars. Choose a charity that will use your vehicles, distribute them to their beneficiaries or sell them and use the profits to fund its programs. Avoid charities that use for-profit agents to handle auto donation programs for them, especially if these charities have no control over the agent’s activities. These are usually not eligible for tax deductions.

Donate old cars to an eligible charity whose work you respect. Maximize the effect of your auto donation by giving to a high-performing charity whose cause you support.

Formally sign your car over to your chosen charity. Make sure the transfer documents are complete and filled-out. Otherwise you might be liable for violations by future owners of the car.

Getting tax benefits from your auto donation

Calculate your old car's value correctly. Use your car’s Fair Market Value (FMV) instead of its blue book value. A well-maintained car will have a higher fair market value than a similar car that has been driven for thousands of miles without repair. The IRS will only allow a deduction on the Fair Market Value (FMV) of your car, so make sure you get the value right.

Itemize deductions on your personal tax return, especially if your total itemized deductions are greater than the standard deduction limit set by the IRS. Consult your tax adviser about this.

Document your auto donation deduction properly. Documentation requirements usually vary, depending upon the amount of your contribution. Consult your tax adviser or IRS Publication 526 for details.

Ask for a written acknowledgment of your auto donation from your chosen charity. If your charity sells the car, the written acknowledgement must be issued within 30 days of the sale. The acknowledgment must include your name, the vehicle identification number, details about the sale of your car and the date of contribution. If your charity intends to improve your auto donation for future use, the acknowledgment must state the planned improvements and certify that the charity will not transfer the car in exchange for money or services before completing the improvement.

You seldom find opportunities to contribute to society and benefit in return. If you take your time and make wise decisions before you donate old cars, you and your chosen charity will both end up winners.


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