Donating a car can be a terrific way to dispose of your old, unwanted vehicles. Car donations can be a great opportunity for you to help others for a charitable cause. Donating a car can be much easier and less expensive to get rid of that trying to do business with a junk yard. Giving you the opportunity to do something noble, while still getting rid of your big heaping burden, can really take the stress factor out of getting rid of an old car. Additionally, it’s not completely without financial reward, as you can see yourself a nice tax return come tax season. Whether you have considered the prospect of donating a car or not, here are some myths and facts everyone should be aware of.
Non-cash donations to charities can often trigger an audit by the IRS. Therefore, its important to keep all necessary records, including records regarding the value of your car.
Like giving to most charities, car donation is tax deductible, giving you a chance to get a portion of the fair market share on your vehicle. However, there are some complications that make determining the fair market share difficult, but it is possible, requiring you to itemize deductions among other things. Just remember to ask for your receipt.
Getting the complete fair market share for a car donation is unlikely, and is not a reasonable request. Most will get a small portion of the fair market share on their vehicle. If you are only concerned about getting paid, selling your car is a better bet.
You might wonder what a donated car is being used for. For most charities, the donated cars are picked up and delivered to someone in need of transportation. However, if your car is in poor condition it may be salvaged for parts.
Individuals donating cars worth more than $500, will need IRS Form 8283 to be attached to their tax returns. This form will be used to verify acknowledgement of the donation from the charity itself as well as to acknowledge that the car will not be sold or transferred.
While cars worth less than $5,000 do not usually need an appraisal, cars worth more than $5,000 should be appraised for the sake of the IRS at tax time. Not having proper documentation for the value of your car, will likely trigger an audit.
Not all charities will be able to accept a car as a donation. You’ll need to check with your charity of choice to be sure they have the resources to handle your donation.
Just as you would if you were selling your car, you’ll need to fill out the proper forms when donating your car. You’ll need to cancel your registration and complete all title transfer paperwork accordingly. The order of steps may vary from state to state.