There are some things that you need to keep in mind when you’re donating your car to a charity. Policies for car donation will change from state to state so be sure to find out the legalities of donating a car in the area where you live. Before you donate a vehicle to any charity make sure that they are able to accept tax deductible donations. This is so that you can use your donation as a deduction towards your taxes. When you make your donation make sure that you get a copy of the “IRS letter of determination” from the charity which will be the verification that you need that they have status for tax exempt donations. The other thing that you want to make sure that you get from the charity is a receipt of your donation which you can enclose with your tax return.
You’re the one that is going to be responsible for determining the value of the car that you’re donating. If the estimate that you come up with is inaccurate you’re the one that is going to be paying the penalty if the IRS questions the value. This law is in place so that you won’t overvalue the cost of your car donation to receive a higher tax deduction. One thing to keep in mind is that the IRS is often alerted by donations that are not cash. And this means that there is more chance of you being audited. So it pays to be accurate about the value of the car that you’re donating.
At the time that you donate your car you’ll have to hand over the title to your car to the charity so make sure that you have it ready. Have your vehicle in good running condition as well as have an estimate from a car dealer of the fair market value of the car. It’s important that you find out ahead of time what types of vehicles the charity of your choice will accept since some charities won’t accept vehicles that are older than a certain year.
Donating your car to charity is a fulfilling way to give to the charity of your choice while at the same time allowing you to get rid of a vehicle that you no longer need. The charity will get money that they need and you’ll get a great tax deduction.
