Every year many people think about maximizing their tax deductions through various donations.
One of these potential donations is a car donation.
Donating your car for a tax deduction can be a win-win situation.
It sure sounds like it doesn't it? You get to save on taxes and help a charity out.
But, you have to keep a few things in mind before you venture down this path.
Keep the following pointers in mind and you will be on the right track 1) Pick the right charity Not all charities can accept a car donation.
Research the potential charities online to see whether they have the right reputation and to get an idea of their track records.
Another two websites would be Better Business Bureau and the Charity Navigator.
Besides reputation, you should also confirm that the charity is an IRS-approved 501(c)(3) organization.
Usually your synagogue, church, temple or mosque qualify.
It's important to confirm anyways.
You should check out the IRS's website and search for qualifying non-profits.
Tip: If you type '78' in the search box on the IRS home page you will find the right page.
2) Donate directly to the charity Avoiding intermediaries or middlemen is a good idea.
There are various organizations that offer to 'help' you in your car donation.
The problem usually is that these middlemen take a cut of the value and give the rest to charity.
The charities and you both get a raw deal.
To avoid this, visit the charity and donate the car in person.
3) Keep track of all the details Make sure you have accounted for any outstanding tickets and get the title transferred to a new charity.
Report the transfer to your local DMV.
Don't just hand over ownership without filling out the charity donation papers.
You should know the market value of your car and what your charity decides to do with the car.
If it uses the car for its daily activities, then you will be able to deduct the fair market value from a reliable source such as Kelly Blue Book.
Instead, if the charity decides to auction or sell off the car you have to get that information and mention the amount on the right form.
If the car sells or is worth more than $500, you will have to file IRS Form 8283.
Like we mentioned earlier, keep a copy of the donation receipt and the title change.
One of these potential donations is a car donation.
Donating your car for a tax deduction can be a win-win situation.
It sure sounds like it doesn't it? You get to save on taxes and help a charity out.
But, you have to keep a few things in mind before you venture down this path.
Keep the following pointers in mind and you will be on the right track 1) Pick the right charity Not all charities can accept a car donation.
Research the potential charities online to see whether they have the right reputation and to get an idea of their track records.
Another two websites would be Better Business Bureau and the Charity Navigator.
Besides reputation, you should also confirm that the charity is an IRS-approved 501(c)(3) organization.
Usually your synagogue, church, temple or mosque qualify.
It's important to confirm anyways.
You should check out the IRS's website and search for qualifying non-profits.
Tip: If you type '78' in the search box on the IRS home page you will find the right page.
2) Donate directly to the charity Avoiding intermediaries or middlemen is a good idea.
There are various organizations that offer to 'help' you in your car donation.
The problem usually is that these middlemen take a cut of the value and give the rest to charity.
The charities and you both get a raw deal.
To avoid this, visit the charity and donate the car in person.
3) Keep track of all the details Make sure you have accounted for any outstanding tickets and get the title transferred to a new charity.
Report the transfer to your local DMV.
Don't just hand over ownership without filling out the charity donation papers.
You should know the market value of your car and what your charity decides to do with the car.
If it uses the car for its daily activities, then you will be able to deduct the fair market value from a reliable source such as Kelly Blue Book.
Instead, if the charity decides to auction or sell off the car you have to get that information and mention the amount on the right form.
If the car sells or is worth more than $500, you will have to file IRS Form 8283.
Like we mentioned earlier, keep a copy of the donation receipt and the title change.
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