When you decide to donate a vehicle to a charity, you will help both yourself and the charity. In order to make sure you get credited correctly, we have put together some helpful hints for your taxation pleasure.
Check the CharityMake sure the charity is a designated non-profit that has 501(c)(3) status with the IRS. If you donate the vehicle to a charity that does not have this designation or tax status, you will not be able to make a donation claim on your taxes at the end of the year.
Check out the backgrounds and histories of various charities to which you want to donate. Find out what they will do with the vehicle — whether they will refurbish it, resell it or use it.
Fair, Not Full, ValueSome charities erroneously advertise that you may claim full market value from your donation. You actually can only claim FAIR market value for a donated vehicle when you file your tax returns. The IRS usually recommends the Kelly Blue Book for finding the value of your car and the NADA pricing guide for finding the value of a boat, motor home, truck, motorcycle or other vehicles. You may also use other pricing guides, such as the Black Book, Edmunds or even private appraisers.
When donating a vehicle, the fair market value will be determined based on a number of factors, including year, make, model, mileage, mechanical condition, body condition, “extras” and region.
If you get a fair market value quote online, be sure you print out the quote and keep it for your tax records.
Keep ALL Your RecordsKeep every single piece of paper and documentation when you donate your car or vehicle; you never know when you will need to verify information. Some of the most important forms of documentation are the appraisals or verifications of fair market value for your vehicle, the vehicle’s year, make and model. When you donate to a charity, you will also need documentation from the charity showing their receipt of the vehicle, their description of the vehicle and its value, their tax ID number, any goods or services you received in return for the vehicle and the fair market value of those goods and services.
Be Sure to ItemizeIn order to receive a deduction on your taxes, you must itemize your taxes. Many people make charitable contributions throughout the year and may even donate a vehicle, but will not receive any benefits on their taxes because they only fill out the 1040 short form. You will need to itemize your deductions and fill out the long form if you want to receive the benefits from your charitable contributions. Be sure that you also talk to your tax adviser about the steps that need to be taken to make sure you receive proper deductions on your taxes when you donate a vehicle.
By D. Blair Thompson