Charity is never overrated. It’s generous and you get to help those who are in dire need too. All good vibes for charity. Well, most of the time, this is the case. But when you give a car to charity, sometimes you have to deal with countless hassles before you get through with it. It’s good to know that most car dealers don’t have a good reputation for the trade.
For charitable organizations, they may use cars for convenience, or else
these cars are sold in batches en masse. In this era, doing something generous as donating a car to charity can prove to be a hassle.
There are rules that cover these donation deeds. So before you write off your used car to charity, you may want to check out these rules first. Basically, you have to ensure that the charitable organization is legit and that it is eligible to accept donations that are tax-deducted. To be safe, you can request a copy of an organization’s tax exemption status from the IRS or Internal Revenue Service.
Ask for an official receipt after you hand in your donation as well. A donor should also bear in mind that if you donate a car sans cash transactions, IRS shall check you out. Your accounts will of course be audited for this donation. Don’t forget to keep your record or deed of donation as documentation and precaution as well.
If you’re planning to donate a vehicle that has a market value of say, $500 or more, you are required to fill up an IRS report for it which will then be filed together with your tax returns. Keep the receipt or acknowledgment of donation from your chosen charity and attach it to your tax returns as well. If the car is then sold by the organization some time after you donated it to them, it is imperative that you get a copy of the sale price certificate to prove that the buyer and seller of the car is not directly related to each other.
Check to see that the eligible tax deduction is stipulated on the sale price. Now if the charitable organization does not have plans to dispose of your car, in 30 days, you shall be issued with a receipt and a certificate that contains their plan with the car, and a declaration that it will not be sold or transferred anywhere later on. For your protection, charitable organizations are legally bound to not make bogus acknowledgments.
As for cars that are worth more than $5000, you will have an appraisal from an independent authority. If your car is less than $5000, the most reasonable price can be determined through the National Auto Dealers’ Association. To get the right valuation, the present condition of the car, mileage, model, and the year it was manufactured should all be considered.
As a donor, it is your responsibility to have the car tested and assessed. Now, if you have added other accoutrements on your car to enhance its functionality, then you’ll have to acquire receipts for the add-ons too. Lastly, snap a picture of your car for remembrance. The IRS may probe you with questions but when you have everything tackled, you can deal with them with as less hassle as possible.