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Nine Important Guidelines for Donating Your
Car to Charity
If you have decided that it is time to get a new car, but do
not want to go through the hassle of selling your old one, one
option that you can consider is donating your car to charity.
This is easy to do and can provide you with a sizeable tax
deduction if you do it properly. Here are nine important
guidelines for donating your car to charity.
First, you will have to find a charity that will accept your
car donation. If you can, you want to avoid the organizations
that are for-profit. These are often the most advertised;
however, when you work with them, a large portion of the
proceeds from your car is kept by them instead of going
directly to the charity of your choice. If you are able to find
a charity that will take your car directly, they will then be
able to keep all of the profits for their own uses.
Second, if you charity does not accept cars, you will want to
take the time it needs to find a charity that does and still
supports a cause that you believe in. Remember that you do not
want to give you car away to just anyone, you want it to
support a cause that you believe in.
Third, if your car still runs, you should consider driving the
car to the charity yourself. Even if your charity is worthy,
they are still going to have to pay for someone to go and get
the car from you if you do not deliver it.
Fourth, if you end up deciding that an intermediary agency is
right for you, you will want to look into the amount that your
charity will ultimately receive. The IRS does not regulate the
percentage that goes to the intermediary and that goes to the
charity, it is up to the two of them to work it out on their
own. Before using the intermediary, contact the charity and see
if the numbers that they gave you are correct. State attorney
Generals are becoming stricter on for-profit middlemen to help
ensure that your charity is actually receiving the
donation.
Fifth, find out if your organization is a 501 (c) (3). This
insures that your donation is tax deductible. While still
non-profit, a 501 (c) (4) company donation generally will not
qualify for a tax deduction.
Sixth, make sure that you transfer the car correctly. In some
instances, the charity will ask you to leave the ownership
space on the donation papers blank, with the theory that they
do not have to re-title when the sell. If the car is not
formally signed over, you can be held responsible for parking
tickets or criminal activity that is performed using the car.
In general, the charity is going to try and resell your car as
quickly as possible so that they can use the money. If the
purchaser does not register the car and it was not signed over,
it is legally still yours and you are responsible.
Seventh, make sure your car is valued correctly. The IRS is
being more careful with how vehicles are donated. This can mean
a higher instance of audits and a change in some laws. Under
new laws, your deduction for your car will be determined after
the car is sold and the charity sends you a receipt for the
amount it received.
Eight, make sure that you fill out all paperwork. If the car
sells for more than $500, you must fill out form 8283 and send
in with your taxes.
You need to make sure that you use the Fair Market Value for
your car, not the Kelley Blue Book or NADA guide. This is true
if the charity keeps and uses your car; the charity improves
your car before selling it; the car is sold at a discount to
low income persons; or if your car is worth less than $500.
Taking the time to take care of your car donation properly will
help to protect you, make it easier to claim your tax
deduction, and make sure your charity gets everything that you
intended them to.
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