A charitable organization that uses a donated car or any other vehicle for transportation benefits directly from that donated item. But, in many cases, donated cars are sold either by the charitable organization itself or by the dealer so that the funds can be raised for the charity. However, the charitable organization receives a flat fee for the donation of a single car sometimes is as low as just $45. The dealer should make sure that the donate car tax deduction is as high as it can. In this way, the charitable organization will have to pay fewer fees.
So, in case you want to donate a car then this article might be very helpful for you. Scroll down and check out all the below points with regards to donating a car.
To get the highest tax deduction on the donation of a car and to make sure that the full estimation of the auto benefits a charitable organization, you can donate car to charity that is able to use it in its operations or you can give it to a person that needs the car. Otherwise, the deduction of the tax won’t be based on the fair market value of the item and it will limit to the money that the charity receives from selling the donated car.
After you have chosen the best charity to donate a car, before donating a car, you need to make sure whether a charitable organization directly accepts the donation of cars without involving any third parties. If conceivable, you can drive the car to a charitable organization rather than utilizing pickup. This will enable the organization to receive all money of any proceeds from selling the vehicle.
Also, before donating a car you need to ensure that the organization that is receiving your donated car is eligible enough to receive the tax-deductible contributions. And, don’t forget to get a copy of the organizations’ IRS letter of assurance which shows its tax-exempt status.
All the non-cash donations are one of the most common audit triggers by the IRS so you need to document the whole car’s value and should keep the proper records of it.
In case you want to donate car to charity that is worth more than $500 then the donor must finish IRS “Section A” Form 8283 and should attach the section along with their tax return. Contributors are required to record with their tax return a written affirmation from the charitable organization.
Along with all these things, at the end, you need to make sure to get a receipt for your car donation from that charitable organization.
So, before donating a car to any charity, make sure you have gone through all the above-mentioned points.