When you donate your car to charity, the effect is two-fold: You’ve helped less fortunate people who can’t afford transportation, and you receive a tax deduction for your vehicle donation. Follow the below steps when you donate your car to make sure that you get your tax deduction you deserve.
Learn which vehicles you can donate.
Most charities accept more than just cars. Generally, they’ll take anything that’s manufactured for use on public streets, like cars, trucks, RVs, trailers, motorcycles, buses and snowmobiles. You may also be able to donate boats, jet skis, and aircraft, depending on the charity and local rules.
Boat donations are actually quite popular in many locations, as charities will sell the boat at auction and then give the money to those in need. Florida is a particularly popular place for this industry, so it is easy to find a Florida boat donation center in any part of the state. You do not have to transport your boat at all, as taking a few pictures and then notifying the charity of your intentions is all you have to do. You will receive a tax deduction in exchange for your generosity and will never have to deal with your old boat again.
Your vehicle donation does not have to be working properly to be accepted. For example, your vehicle can be donated even if it has mechanical issues or did not pass an emissions test.
Donate your car to a reputable charity.
To make sure you’re eligible for a tax deduction, make sure your preferred charity is qualified by the IRS. You can check the charity’s status in the IRS Publication 78, Cumulative List of Organizations, found online, in public libraries or by calling the IRS at (877) 829-5500. The charity will be listed as a 501(c)(3) if it is qualified. Qualified charities include not-for-profits, religious and community organizations.
Be cautious of organizations that offer to buy your car from you and then find a suitable charity. In this situation the middle-man pockets most of the profit instead of the charity.
Transfer the title when you donate your car.
To avoid the liability of tickets or accidents that take place after you donate your car, transfer the title to the charity so the vehicle is their responsibility. Also, remove the license plates when transferring ownership and return them to the DMV.
Determine how much to claim for your vehicle donation.
There are two ways to calculate the value of your vehicle donation. If the charity decides to keep the vehicle for its own use, you can claim its fair market value. This figure is available via online sources like Kelley Blue Book. Depending on the amount, you may need to provide a receipt from a professional appraiser when filing your taxes. If the charity decides to sell the vehicle, you may claim either the fair market value or the amount the charity received for it, depending on the final purchase price.
Claim your vehicle donation.
After you donate your car, you’re ready to claim your vehicle donation on your taxes. Itemize your deductions on Schedule A of Form 1040. For claims greater than $500, you will also need Form 8283, Section A or Section B.
Make sure you cover your remaining automobiles with auto insurance. Call a reputable company or go online for online car insurance quotes. Learn if you’re eligible for auto insurance discounts and start saving today.