Whether you wish to donate your car for altruistic motives or personal reasons, you need to be aware of the automobile donation procedure and the IRS rules governing it. You can avail of car donation services that carry out all arrangements for you and smoothen out the necessary paperwork too.
Your decision to donate your automobile to a charitable organization can make a significant contribution to the cause. You can donate cars, trucks, vans, motorcycles, RVs, boats, trailers and airplanes too. While most automobile donation services accept only running vehicles, some also agree to pick up those are not in running condition. Car donation agencies make arrangements to pick up your car donation at no cost to you, almost anywhere in the United States. They also supply you with the necessary paperwork to claim your tax deduction for your car donation.
When you donate your car to a charitable organization, it is likely to be sold in a public auction to the highest bidder. Sometimes donated cars are sold directly to used car dealers and the net proceeds are transferred to the charity of choice of the donor. The gift of a car donation can help the charity raise revenue.
You can claim tax deduction only for donating automobiles to qualified non-profit organizations. Taxpayers can use the IRS Web site to check that an organization is qualified by searching Publication 78. Publication 78 is an annual, cumulative list of most organizations that are qualified to receive deductible contributions.
- The Certificate of Title is essential for any car donation. The automobile must be donated by the legal owner. Furnishing false information can attract penalty. The donor's taxpayer identification number also needs to be furnished.
- Vehicle identification number is also essential for any car donation
- It is essential to itemize the deduction on the personal tax return to be able to claim tax deduction.
- The IRS will allow only a deduction for the fair market value of the car. A car's blue book value is not always the same as its fair market value.
As per the latest IRS guidelines for all automobile donations from January 2005 onwards, if you donate an automobile for under $500, you need to file the receipt that you receive for tax purposes. If your car donation grosses over $500, a supplemental receipt with the sale price is needed for you to write off your donation as a deduction amount up to the sale price. Under the new rules, the charitable organization must provide an acknowledgement to the donor within 30 days of the sale stating the amount of gross proceeds. The donor must attach a statement of sale to the tax return in order to receive the deduction. The charity can make improvements on the vehicle and use it.
In such a case too the donor can deduct the car's market value.
Car donation services will walk you through the vehicle donation process. They have direct access to eligible charities and can help you with their experience in the procedures involved in automobile donation and tax deductions. An organization that specializes in international donations can make it easier to make your donation to deserving causes abroad easier.