1. Avoid middlemen. Numerous for-profit intermediary
organizations advertise aggressively on TV, billboards and elsewhere,
offering to help you donate your vehicle to charity. Here’s the catch:
These organizations typically keep about 50 percent to 90 percent of the
vehicle’s value for themselves, and the charities don’t get what they
could have gotten. To prevent this, check directly with charities you
admire and find out whether they accept car or boat donations.
2. Find a worthy charity. If the charities you
normally support aren’t equipped to accept such donations, do some
homework until you find a reputable charity that is. You can research
charities’ track records online at this Better Business Bureau site and through Charity Navigator.
3. Check the math. If you still feel compelled to
use an intermediary organization – possibly because you’re busy – at
least ask the organization how much of the car or boat’s value will go
to charity. If the organization simply gives charities flat fees — say,
$100 for a used vehicle regardless of its value, or $2,000 a month —
your donation may not be eligible for a tax deduction.
4. Know the status of your recipient. In order for
you to qualify for a deduction, the charity that gets your donation must
be an IRS-approved 501(c)(3) organization. Your church, synagogue,
mosque or temple likely qualifies. (Check first just to make sure.) You
also can visit the Internal Revenue Service’s Web site
and search for Publication 78 to find other qualifying non-profit
organizations. (Just type “78” into the search field on the IRS home
page and you’ll be directed to the right publication.)
5. Do the delivery yourself. Once you’ve identified a
worthy charity, recognize that it will have to pay someone to pick up
your car or boat for you. To help the charity maximize the benefit of
your donation, drop the car or boat off yourself.
6. Transfer the vehicle with care. Want to eliminate
all risk of running up parking tickets and other violations after
you’ve said goodbye to your donated vehicle? Then formally re-title the
vehicle to the charity, and report the transfer to your state’s
department of motor vehicles or licensing. Never agree to leave the
ownership space on the charity donation papers blank.
7. Your estimate of the donation’s value probably won’t cut it.
If your car or boat is worth more than $500, the IRS is going to want
to see evidence of how much the charity got for it. (Most charities that
accept these donations turn around and sell them for cash.) You’ll need
to get a receipt from the charity revealing exactly how much money it
made.
8. Know when you can report the fair market value.
You won’t need evidence of the sales price if the charity keeps the
vehicle or vessel and uses it in its charitable work, or if your
donation is worth less than $500. Then you can report its fair market
value based on listings from Kelley Blue Book and similar sources.
9. Keep a thorough paper trail. If your donation is
worth more than $500, you’ll have to attach IRS Form 8283 to your tax
return. If it’s worth more than $5,000, your documentation must include
an outside appraisal. You’ll also need proof of the donation, such as a
receipt from the charity and a copy of the title change.
10. Be detail-oriented. This paper trail may seem
cumbersome, but think about it: This may be one of the biggest
charitable donations you ever make. By taking the time to dot the i’s,
you can make sure that the charity gets the most benefit and you get the
biggest possible deduction.
Sources and resources
from: http://www.today.com/
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