4 Easy Steps To Profit From Donating Your Vehicle

1)    Choose A 501(c)(3) Charity. Make sure that your chosen charity has the 501(c)(3) public charity status, because donations to most 501(c)(4) charities are not tax deductible. 501(c)(4) organizations are civic leagues and social welfare groups that have the ability to lobby the government, like the Disabled American Veterans and the National Rifle Association. To find out which charities are qualified by the IRS to receive tax-deductible contributions, see IRS Publication 78, Cumulative List of Organizations.

2)    Know How the Charity Will Use Your Car. If the organization you choose will be selling your donated vehicle, you are entitled to a deduction equal to the gross proceeds from the sale, as indicated on the final receipt. This means that you can get a deduction for the amount the car was sold for, NOT how much the car is actually worth. The only exception to this rule is that if the car is sold for less than $500, the donor can apply for a deduction in the amount of either $500 or the fair market value of the car, whichever is less.

3)    Know How Much Your Car’s Worth. As you may have guessed from the last tip, it will be handy to know your car’s fair market value to assess if donation is the best option. In addition, if the charity will be keeping your car for use, making improvements to it, or selling or giving the car directly to a needy person at a value far below fair market value, you may be able to receive a deduction in the amount of the car’s fair market value. This might impact your choice of charity, so know your vehicle’s worth before taking the plunge!

4)    Do Your Paperwork. In order to receive a tax deduction when you donate a car, truck, boat, motorcycle or RV, you must have a written acknowledgement from the charity that they received your gift. This document must contain your name, taxpayer ID, the vehicle ID number, the date of contribution, and a statement that outlines what (if anything) the charity gave you in exchange for the car at the time of donation. In addition, you should itemize the deductions on Schedule A of Form 1040 and include Form 1098-C Contributions of Motor Vehicles, Boats & Airplanes, which should be provided to you by the charity within 30 days of the vehicle’s sale. If your car is worth more than $500, you must also complete IRS Form 8283 Noncash Charitable Contributions and attach that to your taxes.

Ready to Donate your Car?

If you’re looking for a 503(c)(3) charity in the Gulf Coast region that will gladly accept your donated car, consider the Greater New Orleans Volunteers of America. To find out more about how you can provide a helping hand to kids, families, seniors and veterans in sixteen Louisiana parishes, visit their website to donate your car, or call (504) 525-2179 today.