Take Advantage of IRS Deductions: Donate Car To Charity
Sure, it’s hard to let go of a car which has served you well for a long time but with soaring car repair costs, keeping it would pose more liabilities than buying a brand new one. It’s also not easy to sell a used car, especially one that has incurred a high mileage or is too old to be traded in. So what would be a better and more viable option? You can donate car to charity.
When you donate car to charity, you not only help someone in need through charitable organizations but also reap the rewards by getting a tax deduction. But you can only sow the benefits of a tax deduction if you follow these tips in automobile donations:
1. Find a legitimate charity to donate the car to – When you plan to donate car to charity, a little research can help you avoid disappointments later. There are those that offer you a hassle-free way to donate car to charity within your community, but don’t be fooled. These charitable organizations may be miles away from where you are at.
If the name of the charities these middle-men claim to cater to sounds dubious and unfamiliar, it’s best to take their claims with a grain of salt. Better yet, look for a 501 (c) (3) charitable organization in your area which espouses the same mission you want to support. In this way, you will not only take great advantage of tax rebates but will also be able to help support the charity of your choice.
2. Donate the car yourself – why let the charity pay someone to get the car when you can do it yourself? This will help the charity get the best out of your donation. And make sure you deliver the care with utmost care when you donate car to charity. Bring all the necessary documents and re-title the car to the charity you’re donating it to. Never agree to leave the ownership space blank.
3. Do ask questions – When you donate car to charity, it’s best to know what causes they support and how the car donation will help them. Some charities may refurbish and donate the car to people in need of transportation or send them to technical schools for auto-shop or mechanic programs. Others will sell or auction the car or its parts and get the proceeds. If the organization does not provide you with this information, it’s best to steer clear.
4. Know when to declare the fair market value – You can declare the car’s fair market value if the charity will use the car for charity work, or if it’s worth less than $500.
5. Keep a paper trail – IRS has austere rules when it comes to car donations. If the car you donated is more than $500, attach the IRS form 8283 to your tax return. If it’s more than $5,000, include an outside appraisal to your tax return. You must also keep the receipt from the charity and a copy of the title change.
It’s a good deed to donate car to charity, so make sure that it goes to a charity and ends up helping others. Due diligence on your part will ensure that this is what will actually happen. And don’t hesitate to follow up a few months later to check where your car went!