Do you have a car which you wish to donate for a good cause but you do not know how to go about it? Donating a car to charity may sound effortless but with the advent of various scams involving such matter, it is better to be careful with how we deal with the whole process of donation. Donating your vehicle to charity can make a big difference to someone who might be fighting cancer or kidney diseases. Nonetheless, it involves several procedures which you have to comply with to avoid future hassles, especially involving the IRS.
Car donation programs are tax-deductible
Most Americans nowadays are opting for vehicle donation to charitable institutions instead of selling or trading their used vehicles. In this way, they are making a difference in the lives of thousands of people who would benefit from the proceeds of the donated car or the actual use of the car itself in some instances, while averting themselves from the bothersome process of selling or trading-in used cars. Moreover, donating a vehicle is tax-deductible. However, the actual amount of tax deductible can only be ascertained after the charity has sold the donated car.
This recent change in the law governing car donation has arisen due to the bulk of vehicle donation to charities in the past several years, which triggered the IRS to be more stringent with such transactions due to several misrepresentations in the past by greedy taxpayers.
Prepare vehicle documents and do the paperwork
Depending on the charity you will chose, the requirements for donating a vehicle would vary from charity to charity. However, it is a standard procedure to prepare data regarding the make, model and year of the car as well as its mileage. You should also prepare the proof of ownership as well as the Vehicle Identification Number (VIN) of the car. The form to fill out will depend on the charity you will give it to. Nonetheless, you need to fill out an IRS form 8283 which you should attach to your tax returns.
Choose a charity that directly accepts vehicle donation
There are thousands of charities out there who need your donation but several of them do not have a car donation program. If you really wish the foundation or institution to get the whole value of the donated car, you should find a charity that directly accepts the donation. Charities which operates vehicle donation program through an intermediary organization would not be able to enjoy the full amount of the donation since they will have to share it with the organization which facilitated the car donation project. Chances are, these intermediary organizations will keep for themselves at least 50% of the value of the vehicle.
Find an intermediary whose sharing ratio is fair
If your chosen charity does not directly accept car donations and you are forced to deal with intermediary organizations, find one who will do the work at a fair cut. It is customary for these intermediary organizations to profit from these car donation transactions but ensure that the charity you are donating to will keep the bigger share of the proceeds.
Obtain acknowledgement receipt
Whether the charity will sell the donated car or use it for their operations, you need to ask for an acknowledgment receipt of your donation. You will now be required to attach it to your tax returns.
Proper transfer of vehicle
Ensure that you properly transfer the ownership of the vehicle to the charity you are donating it to. Chances are, such charity will sell the car at the first instance. Hence, whoever will have the fortune of buying it will be using it for their own use. If no proper transfer of vehicle ownership is made, whatever traffic violations or misdemeanor that such vehicle will be involved will still be directed to you since under the law you are still the owner of such car.
For most car donation transactions, the donor is the one who benefits the most rather than the beneficiary charity. Nonetheless, as the donor, if you can take the time to assess the myriad eligible charities out there which will really put your donation into good use, all will emerge as winners.