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Car Donation For The Wise
from:Advertisers make car donation sound so uncomplicated: Donate a used car instead of going through the hassle of selling it, and then instead of cash you get tax write offs. It's a no lose situation right? After all you still get some sort of return and in the process you even end up helping someone else.
Unfortunately like all ideas with great intentions things always seem to go awry, and with car donations this is usually the case. So before giving away your vehicle you'd better read this.
Help A Deserving Charity
There are numerous charities out there, thousands and in fact even millions. You probably already favor a certain charity, despite this, visit or call and ask if they can accept a vehicle donation. Not all charitable institutions accept automobile bequests. Ergo, make calls and visit their offices personally to ensure that they are legit. The IRS website has a complete list of all qualified charitable institutions.
Instead of asking the charity to pick up your gift, drive it down yourself. This'll help the charity save on the cost of having someone tow or pick up the car. The goal here is help to the charity make money, not spend it.
To make a clean break, ensure that the Car Title is appropriately transferred to the organization's name. If you don't, you might get mail regarding unpaid parking tickets, and then you'll be in trouble.
Keep Clear!
If you can make time, try to refrain from using middlemen or what's called a car donation service. Although they mean well, you cannot deny the fact that they are businesses, and an enterprise's main goal is to create income. It could be that they only give $200 to charities for every $1000 they make selling your car. This defeats the end of being able to give the charitable institution maximum revenue. If you calculate it, only 10 to 20% actually goes to the actual charity. Additionally, if say only $100 reaches the charity then you will not be eligible for the tax subtractions.
Be Meticulous
Try and keep track of all the paper works. You must keep extra copies for yourself for later purposes and for your current IRS needs. Make sure you fill up all of the IRS required form. The proof of sale will not be needed if the charity keeps your car for their use. By the way, this is where working with a good charity can help you because they are actually going to be the one to provide you with the necessary forms and documentations. If you're giving away an expensive or relatively new vehicle then you need to get independent appraisal.
Last But Not Least
Before going ahead with making a car donation, make sure you remember these last few reminders. Do not over estimate the value of your car; the IRS has a price basis of how much your car's current value is more than $500. If it's less than that amount, then you can claim as much as the charity got for selling the car. Don't try to cheat to get a bigger tax write off; the IRS has stringent compliance rules. The charity has to provide you with an Acknowledgement Certificate that states the charity's name, address, the car's present condition, and if the charity gave anything in payment of the car. Remember if you get something in return then the donation in now deemed sale.
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