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.

Some organizations available to donate your car to are actually turning around and selling the vehicle for profit and donating a portion of the money to charity. To be sure your donated vehicle is going to someone in need, there are some things you can do.

5 Things to Do First Before Donating Your Car to Charity

1. You should check the Charity Navigator or Better Business Bureau web site to make sure you select a legitimate charity. Make sure your charity meets the Standards for Charity Accountability. These standards were developed to encourage fair and honest solicitation practices, to promote ethical conduct and advance support of philanthropy.
2. You should consider choosing a local charity, one you are somewhat familiar with or have donated to previously. Choosing a local charity will make it easier for everyone involved.
3. Talk to someone you know who has donated a vehicle and ask about their experience.
4. Before you choose an organization to donate your vehicle, you should first figure out the Fair Market Value of your vehicle for tax deduction purposes. You can search Publication 78 on the IRS website to find out the specific guidelines for calculating the Fair Market Value of your vehicle. You must also take into account any accessories, the car’s mileage and the physical condition of the vehicle. Tax Law Regulations change every few years and so do deduction specifications. It is important to check with the IRS for any changes in tax laws regarding donation deductions.
5. When donating your vehicle you should be certain to choose an eligible organization or your donation may not be tax deductible. Many taxpayers can’t take a deduction for their donated vehicle because they don’t itemize their deductions and choose to take the standard deduction instead. You should be given an IRS form 501c(3) to file with your taxes. There are also record keeping requirements that vary depending on the amount of deduction.

Although it may require a little homework on your part preparing to donate your used vehicle, there is another benefit besides tax deductions. For most people, knowing that you are helping someone in need makes you feel better about yourself and brings a sense of peace and happiness.

Donate your Vehicle to Volunteers of America

If you would like a recommendation for a charity organization that meets all of these requirement listed in this article than we highly recommend Volunteers of America New Orleans. Volunteers of America New Orleans services the Greater New Orleans area who can use all the help they can get post Katrina. If you have an old or new car that you would like to donate for a good cause then click this link here to Donate Your Vehicle to Volunteers of America New Orleans.