Giving an automobile to a good cause
Find out more about the things to take into account if you’re thinking of giving a car or other vehicle to charity.
Giving a car to charity allows you to receive a tax deduction while helping a good cause. All contributors should be aware that only those who contribute to a qualifying charity and itemise deductions on their tax returns are eligible for tax deductions for secondhand cars, boats, or aircraft.
Make certain the charity you are funding is accepted.
Donations to organisations that the Internal Revenue Service has declared to be tax-exempt under section 501(c)(3) of the Internal Revenue Code are eligible for tax deductions. You can: to confirm an organization’s qualification status.
Find out if the organisation is included on the “Publication 78 Data List” of organisations that are qualified to accept tax-deductible charitable donations by searching for it on the IRS website. Alternatively, call the IRS Tax Exempt/Government Entities Customer Service at 1-877-829-5500.
Churches, synagogues, temples, mosques, and governments are not needed to file a tax-exempt application with the IRS or register with the Non-Profit Organizations/Public Charities Division. Donations to these organisations are tax deductible even if they may not be included in Publication 78.
Ask the organisation a lot of questions.
Browse the organization’s website. Examine its IRS Form 990, which should be available at the aforementioned URL and here, and its yearly financial reports, which are both accessible here. Check the charity’s reputation with an independent charity rating organisation, such as www.Give.org, www.charitynavigator.org, or www.guidestar.org, all of which are operated by the Better Business Bureau.
Find out the organization’s goals and how your contribution will further those goals. Find out whether you may direct your gift to a specific programme or service that interests you rather than just the charity’s general fund. Don’t give to a charity that avoids discussing its philanthropic objectives or won’t provide you with information.
Ask the charity what it plans to do with your automobile.
Some charitable organisations repair automobiles and provide them to those in need. In their auto repair courses, several technical institutions employ vehicles. Other organisations just resell the vehicle or its components and donate the earnings to charity.
Ascertain whether the charity manages every part of your donation.
To manage all the intricacies of motor vehicle contributions, several charities enter into contracts with for-profit businesses. Ask how the proceeds from your automobile gift are divided between your charity and the for-profit business if this is the case.
Only deduct what is permitted by law.
Section 884 of the American Jobs Creation Act of 2004 amended the Internal Revenue Code by adding sections 170(f)(12) and 6720 and changing the procedures for donating motor vehicles, yachts, and aeroplanes starting in 2005. Depending on the worth of the vehicle and whether the charity intends to maintain and use it or sell it (or any of its components), there are several restrictions for deductions. The new regulations are described in full in “A Donor’s Guide to Vehicle Donations” (Publication 4303), which was released by the IRS.
Procedures to follow before volunteering your services
If your car is worth more than $5,000, have an expert professional appraiser to evaluate it.
Verify that you have the title to your car. Without a title, a charity shouldn’t accept your gift. Visit a Registry of Motor Vehicles location near you or the Registry’s website to get a duplicate title.
Assume ownership of the title transfer at the moment of the donation. Only the charity or a designated private, for-profit agent of the organisation shall receive an assignment of title. To qualify as an agency for tax-deductible purposes, the for-profit agent of the charity must be governed by the charity. The IRS has outlined the essential conditions of the agency connection in “A Charity’s Guide to Vehicle Donations” (Publication 4302).
You must input the accurate mileage from the odometer, sign and date the form, and assign the title to the charity or an authorised representative of the charity on the reverse of your title. create sure to create a copy of both sides of your title and retain it.
Keep your own record of your donations.
Your record should have the following items:
the charity’s simultaneous written acknowledgment;
The organization’s name and address where you made your donation;
the time and location when your car was picked up;
a decently in-depth description of the donated vehicle or a picture of the vehicle;
the car’s fair market value at the time of the contribution and the methodology used to determine that value;
a certified copy of the appraisal, if one was performed on the car;
any criteria or terms governing the gift of the automobile;
the date, as well as the method through which you acquired the automobile (buy, gift, inheritance, etc.);
a copy of your title, registration, and any receipts the towing company or the charity may have provided you.