Spread the love

Donating a car to charity may be a selfless act where you don’t benefit from the donation or it can be a very kind and thoughtful action with a little benefit such as a tax deduction. If you’re planning on donating a car, especially if you want to get the deduction, you’ll need to follow some rules.
In this article, we’ll give some advice and tips for donating your car to charity in the best way possible so your peace of mind and taxes are smooth!
About the charity
• Make sure the charity is actually qualified for a tax deduction by asking for a record where it depicts they have a 501(c)(3) status.
• Make sure to transfer the car directly to the charity instead of leaving the “property” section blank. Remember they’ll probably sell the car and you can’t guarantee they actually sign the paper.
• If you’re very interest in taking the maximum amount of money for the charity cause, make sure to negotiate the donation directly with them, without middlemen.
• If you use a donations “dealer” website, ask for the percentage they give to the charity.
About the car
• Use fair market value as a reference, instead, you’ll have to settle for what the charity sells the car for (and the difference when sold in an auction can be huge).
• Ask the charity if they’ll make any improvement to your car so you can check the FMV.
• Take pictures of the state of the car and keep receipts for any improvement.
• If you want the maximum amount of money to get to the charity, drive the car to the place yourself so the money of “expenses” will also go to the cause.
About the taxes
• Ask for the receipt for your car donation from the charity. If they take time, ask once again and if not, do some research on the official channels to proceed.
• Make sure you have the right documents for the price of your car, remember these are different if the value is $500 or less, more than $500 and more than $5000.
• Car donations are one of the most audit trigger deductions for IRS so it’s important that you keep record of absolutely everything in order even after completing the donation and deduction.
• It’s important that you actually use the FMV for selling the car because you’ll be the one paying the penalties if the value you reported to IRS is inaccurate.