Donating Your Car to Charity
Wednesday, August 31st, 2011
Have you ever considered donating your car to a charity? I’ve been curious about car donations for a while, and I wanted to know what that meant for my taxes. And what do those charities do with my car, anyway? Cars.com has a Vehicle Donation Program that will donate 75 percent of the vehicle’s value to charity. I looked up my state in the program and found 10 organizations to which I could donate my car. It also allowed me to enter the charity of my choice. To use Cars.com’s program, you complete the paperwork online, print it and mail the forms in. Then the program will call to set up the vehicle possession — not the haunting kind. The burden of reporting the taxes properly is still on the donor. Speaking of taxes, the first thing I’d probably do is select a charity to see if they’d take my car and make sure the charity is legit with the IRS. To do this, you can call the IRS at 877-829-5500 or go to the IRS website. The IRS says that most churches, synagogues, temples and mosques aren’t required to apply to the IRS to be recognized as a qualified organization, so call and double-check if you’re going that route. On the IRS website I found a handy-dandy (if a little long-winded) pamphlet about vehicle donations. It explained that one of three things usually happens when a vehicle is donated to a charity. The first is the charity uses the vehicle for its work, for example, delivering meals. The second option is the charity donates the vehicle to someone in need or sells it at a greatly reduced price to someone in need. In these two instances you can deduct the vehicle’s fair market value from your taxes. How do I find my vehicle’s fair market value? Luckily, Cars.com has its Kelley Blue Book calculator to help you figure it out. The third option is the charity auctions the vehicle and banks the money to use as it sees fit. Things get a little tricky here. In this case, you can only deduct the gross proceeds from the sale from your taxes. So, if your vehicle sells for $1,200, the most you can claim is $1,200. Sometimes, the charity will fix your car up before auctioning it, and I’m sure there are many other circumstances in which the charity might use your car. For these types of transactions, contact the IRS for procedures and clarifications. Make sure you know what the charity is going to do with your vehicle and fill out the proper forms. Again, www.irs.gov. You can’t do enough checking. When you’re done checking and double-checking, you get to fill out some forms. Be aware that an official from the charitable organization will likely have to fill out some paperwork too, so be prepared. Then you will arrange the vehicle’s exchange. Make sure to have the title handy. Yes, donating your car to charity looks complicated, but not necessarily more complicated than listing your car for sale or a long negotiation at a car dealership. And the feel-good component of donating your car to charity is priceless.
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