Thousands of vehicles are donated to charity each year. Every day and all over the country, donors like yourself are asking questions about the how, when, to whom and why of the donation process as they prepare their vehicles for donation. The first and most important aspect of donating your vehicle to charity is to select a charity that can truly benefit from your donation. The subsequent five steps can help you choose such a charity.
Research the Charity
Finding charities that accept car donations is the most important task of any vehicle donor. At a minimum, you want to find a charity that meets all of these qualifications:
- Confirm that the charity is a tax-exempt organization. The IRS (Internal Revenue Service) recognizes certain organizations as tax-exempt. If you make a qualifying donation to a tax-exempt charitable organization you can receive a tax write-off up to a certain amount during your annual filing.
- The charity is set up to receive vehicle donations. Not all charities have the process in place to accept vehicle donations.
- The charity can provide you with the necessary paperwork to claim your tax write-off. They can provide you with the paperwork you will need to claim your tax write-off.
Verify That You Will Receive a Tax Write-Off
If your primary reason for donating your vehicle is to receive a tax write-off during your annual IRS filing, first verify that your vehicle is eligible for a tax credit. Here are the steps to do that.
- The title of the vehicle to be donated is in your name. You can only claim a tax write-off if the vehicle title is in your name. If you need to transfer the title into your name, do that before donating.
- Get a personal assessment of the vehicle’s value and condition. What you need here is an assessment of the “fair market value” of your vehicle before donation. The IRS only allows tax write-offs up to the full fair market value of your vehicle.
- The charity is recognized by the IRS as tax-exempt. Once again, you cannot take a tax write-off if the organization you donate to is not authorized to accept tax-exempt charitable contributions.
Certify Your Vehicle’s Value
Getting an assessment of vehicle value is a step donors frequently overlook. Some donors assume the charity will provide this information to them. Other donors assume the vehicle value is the same as the Kelley Blue Book value. Still, other donors are unaware this step needs to be done prior to the vehicle donation. You need to personally get an assessment of the fair market value of your vehicle. The fair market value is the value of your car on the market after any necessary repairs or maintenance has been done. The Kelley Blue Book value of your car may represent the full value of your make, model and year of car in prime operating condition, but you must know the fair market value of your vehicle in its current condition.
Get a List of Your Donor Responsibilities
You also need to know what other responsibilities you have as the donor. For instance, it is your responsibility to be sure the charity can provide you with a written acknowledgement of donation value in 30 days of transaction completion. You are also responsible for handing over the vehicle title, removing valuables and delivering the vehicle safely.
Determine How Your Vehicle Will Be Used
Finally, you will to ensure that the vehicle will be useful to the charity. Some charities can maximize the donated vehicle’s value — and others cannot. It’s a good sign if the charity tells you they plan to sell the vehicle and use the proceeds in their mission, donate the vehicle to their constituents or use the vehicle directly in their work.
When you follow these five steps, you’ll know you have selected a charity that can accept vehicle donations and make good use of them.
About the Author: Carla Morton is a tax attorney who assists her clients with making donations to various charitable entities.
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