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What to Expect From a Non-profit and Charity Organizations When Donating Autos, Boats and Other Motile Durable Goods
from:Now that the rules have been changed regarding the donation of vehicles, boats and trailers, the rules have changed on both sides of the charity organizations that have always been the central concern in the minds of donors. Indeed, these rule changes were designed by the IRS to help ensure that more money from the sale of an auto or boat is directed at the charity itself and not just the third-party (usually for-profit enterprise) agent that handles the sale.
While non-profit (NPO) and charity organizations have been taking durable and appreciated goods as donations for a very long time, a major change in the tax laws that govern vehicle donations in 2005 have led to a new set of paperwork and documentation that you can expect from the charity organization you choose.
When you contact the charity organization of your choice or answer an ad calling for your unloved and unused boats and autos, you will very often be asked to vouch for its condition. You should also be asked about the make a model of your automobile or boat. This will help the charity determine if the vehicle is likely to warrant an independent appraisal or not. This independent appraisal must be carried out within 60 days of the title transfer and must be done by an authorized appraisal agency, as approved by the IRS.
If a non-cash donation is likely to be valued at $5,000 or greater, such an appraisal is a necessary part of the documentation you'll be required to present to the IRS along with a fully filled in Form 8283 (section B). It's often a good idea to take some pictures of such a high-value donation to your favourite charity organization, too.
The next most important thing you can expect from your charity organization of choice is a receipt of title transfer and a statement of intent. They are required to deliver such documents to you within 30 days of receipt. Generally, the better the condition of the vehicle you're donating, the more likely it is to be used, as is, rather than being sold at auction. This means that you have a much better chance of being able to claim a much higher legitimate deduction.
When you receive your invoice of intent from the charity organization, you'll notice that it should outline the conditions by which the donation was made. For instance, the IRS cannot tax non-tangible benefits such as your personal satisfaction, but they can make adjustments to your allowable deduction (in the form of an audit) if you've received any type of gift from the charitable organization that can have a value reasonably ascribed to it. If you got as much as a calendar or a coffee mug in return, make note of it and subtract its fair value from your deductible.
If the charity organization ends up selling the car within two years of receipt, even if it has been used during that time to fulfill the charitable mission, you will receive a notice of sale (Form 8282) within 30 days of the sale. That doesn't mean you have to do anything to change the deduction you've already taken nor, are you able to take a second deduction.
Remember, if you're donating an automobile, boat or RV to a charity organization, you won't be able to claim any sort of deduction unless you file with a list of itemized deductions (as opposed to the standard deduction that applies, depending upon what status you choose to file under). Many people find that since they don't have any other legitimate deductions in a given year that it actually saves them money to forget that the donation ever happened. In fact, when the GAO investigated filings from 2000 (even before donation deductible oversight was in place) as many as 15% of donors didn't even bother taking itemized deductions.
However, regardless of how you choose to file your own tax returns, the charity organization you choose is beholden to provide you with all the documentation you'll need to make sure the maximum possible deduction benefit allowed under law is yours.
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