How To Donate A Car For Tax Deduction
Learning how to donate a car for tax deduction and give help to the poor is not difficult but attention must be given to small details. Responsibility and paperwork is essential. Keep careful records because the IRS will come after the donator for inadequate paperwork, not the charity. Cover all bases and get the best possible recovery from the tax donation.
Things you'll need:
- The vehicle's title must be clear
- Receipt from charity
- Clear ownership with DMV
- Legal steps Before giving anything of value to any organization, make sure the group is reputable. Next, check with the IRS and make sure the organization is qualified to give a tax deduction.
- Documentation Take a good photo of the vehicle and write down all pertinent information. Note the mileage, condition of the vehicle and date. Don’t stretch the truth; the IRS deals in real facts. Take the time to drive the car to the charity; this keeps the cost of transfers down.
- Title Now that the decision has been made to give the vehicle to an organization, the vehicle paperwork must be taken care of. The car's title must be transferred to the agency. Leave no blank spaces in the paperwork. Notify the state licensing agency of the transfer.
- IRS paperwork Donor vehicles worth between $500 and $2,000 must have tax form 8283 section A snapped to the income tax form along with written affirmation from the agency.
- Value If a car is very valuable ($5,000 and over), an outside appraisal must be given. This little detail may involve an added cost to the donor. The donor also gets the fun of filling out additional tax forms: section B of IRS form 8283.
- Vehicle sale The charity must tell a donor what the vehicle was sold for within 30 days of the sales date. If the vehicle is used for servicing the needs of the charity, the donor is also informed of that information within 30 days and gives the donor a written certificate as to the use of the vehicle.
- Keeping receipts Keeping receipts is always a good policy. If any discrepancies occur, there will be paperwork to show all expenditures. If repairs are made before donating the item, receipts will show the transaction up grade of the vehicle.
- Inform DMV Inform the Department of Motor Vehicles the vehicle has been given to charity. This clears any future liabilities. Your receipt from the charity is proof.
Donating a car for a tax deduction is not a thing most people can do everyday. The donation should benefit the donor and the recipient in a positive way.