Donate Your Car for Kids
Donate Your Car for Kids
The donation of a the car or other vehicle to Charity is a significant charitable contribution, perhaps the largest many people will give in their lifetimes,
Whether the primary motivation to donate is convenience or altruism,
Donors want ot ensure that they receive the maximum tax Deduction allowable . if a tax deduction is an important consideration for you when donating a car to a charity, you should check out the charity; check the value of your car; and see what your responsibilities are as a donor , If you are eligible to deduct charitable contributions for federal income tax purposes (see Qualifying for a Tax Deduction later) and you want to claim a deduction for donating your car to charity, then you should make certain that the charity is a qualified organization. otherwise, your donation will not be tax deductible. The most common types of qualified organizations are section 501(c)(3) organizations, such as charitable, educational, or religious organizations. This publication refers to section 501(c)(3) organizations generally as “charities.”
Choose an eligible organization
The most important consideration when choosing a charity is determining its exempt status , to be eligible for a tax deduction , the car must be donated to a tax- ex - empt nonprofit organization , most commonly a (501 ) (c) (3) organization created for religious, charitable educational,scientific or literary purposes or for prevention of cruelty to children or animals, Religious organizations such as churches synagogues and mosques automatically qualify even without filing for ( 501) (c)(3) status.
For a car donation to be eligible for a tax deduction , the donation must be made solely for charitable or public purposes and the donor must itemize deductions such as medical expenses and charitable donations, Those taking the standard deduction rather than itemizing will not receive a deduction for their donation.Generally it is worth the effort to itemize if the total of the itemized deductions for the tax year is more than the standard deduction one is entitled to.Whether itemizing deductions is worthwhile for you depends on the specifics of your situation.
State Law Requirements – Car Title
Generally, state charity officials ask the donor to transfer the car title to the charity, to make a copy of the title transfer, and to notify the state motor vehicle administration by updating the information on the donor’s car registration about any sale or transfer. In some states, however, there are exceptions to this titling process, and a third party, such as the charity’s agent, may be able to hold an open title or insert a dealer’s name. Before donating the car, you should remove the license plates, unless state law
requires otherwise. This may help you avoid any liability problems after the car is transferred.
Determining the Value of Your Car
The maximum amount you can deduct on your income tax return is the fair market value of your car. Fair market value is the price a willing buyer would pay and a willing seller would accept for the car, when neither party is compelled to buy or sell, and both parties have reasonable knowledge of the relevant facts. Some fundraisers have mistakenly claimed that donors
can, in all cases, deduct the full value of their cars as found in a used car guide (such as “blue book” value). A used car guide may be a good starting point to value your car, but you should exercise caution. The IRS will only allow a deduction for the fair market value of the car,
which may be substantially less than the “blue book” value. Example: You donate your car to the local high school for use by students studying car repair. your credit union representative told you that the “blue book” value of the car is $1,600. However, your car needs extensive repairs, and after some checking, you find that you could only sell your car for $750.
Your charitable contribution deduction may not exceed $750, the fair market value of the car.
Recordkeeping and Filing Requirements
Depending on the amount you are claiming as a charitable contribution deduction, you may need to get and keep certain records and file an additional form to substantiate your charitable contributions. See the chart Recordkeeping and Filing Requirements that follows.
You must obtain a contemporaneous written acknowledgment from the charity if the total deduction you are claiming for a donated car is $250 or more. The due date (including extensions) of the return on which you first claim a deduction for the car. For a deduction first claimed on an amended return, the appraisal must be received before the date the amended return is filed.when you file your income tax return (Form 1040 orForm 1040X), you will need to complete Section B of Form 8283, and attach it to your return.If Section B is required and the charity sells or otherwise
disposes of a car within two years after the date of receipt, the charity must file Form 8282, Donee Information Return, with the IRS. On Form 8282, the charity reports information identifying the donor and itself, and the amount it received upon sale or other disposition of the car. The charity must provide you with a copy of the form. The chart below provides items of recordkeeping and filing requirements, based on the amount you claim as a deduction