Five Things You Need To Know Before Donating Your Car
Five Things You Need To Know Before Donating Your Car: Donating a car to charity is an extremely humbling activity that everyone should do if they can. To achieve the best possible results for the donor as well as the charity recipient, you should be cognizant of some facts on donating a car in charity. We shall be discussing a few below:
- Difference between tax-deductible and non-tax-deductible charities
According to law, many charitable organizations acquire various statuses pursuant to their objectives and processes. When making a car donation, make sure your intended organization is a 501 (c) (3), i: e, public charity status to claim tax deductions. Many organizations that claim non-profit status are in fact 501 (c) (4) organizations that are non-tax-deductible.
- Correct transfer to charity
Sometimes certain charity organizations ask the donor to leave blank the ownership space on charity donation papers in order to skip re-titling the vehicle. Please do not adhere to this request or instead change the charity organization. Failure to formally sign over your car to the designated charity will make you liable to pay for any parking tickets subsequently incurred, or hold you responsible if car is misused.
- Fair market value is hardly achieved
Fair market valuation has stringent requirements; hence, it is not realistic to expect your car will meet them always. Research shows that only about 5% of car donations are fit for use by charity recipients. Most donated cars are auctioned off for sale and the selling price dictates your tax-deductible amount and not your estimate of its fair market value.
- Paperwork should be completed
One of the most common causes of IRS audits is non-cash donations; precisely this is why it is most important that you keep complete documentation of a car donation. It is a fact on donating a car in charity that for different values of car, there are separate requirements. For example, if your car values over $250 you only need to have a written acknowledgment from the charity. Furthermore, if your car values above $500, you should have section A of the IRS Form 8283 completed and attached to your yearly taxes.