f you are considering donating a used car to a charity there are several things you need to know. Your donation benefits not only you but also recipient of your donation. Of course, who your recipient is and how they will use your used car varies from donation to donation. A foster home, for example, can use the car to drive the many children in its care from the center to various points. A public hospital can use the vehicle as one of their ambulances. A home for seniors or the elderly can use vehicles to transport their residents to doctor appointments.
The benefits to the donor specifically entail a tax deduction. The rules for this are as follows:
* If the charity recipient uses the vehicle for its own purposes, the donor can receive a tax deduction equivalent to the fair market value of the said vehicle.
* If the charity recipient opts to sell the vehicle, the donor can receive a tax deduction equal to the selling price of said vehicle, or $500, whichever amount is greater.
To make use of these tax benefits for used car donation, the donor must ensure that the following things taken into account:
* The recipient of a used vehicle donation must be a qualified charity as defined by section 501(c)(3) of the Federal Tax Code. If you are not certain about this or you want to verify whether a charity who has held exempt status in the past is still currently acknowledged by the IRS as exempt, visit your local IRS authority.
* You can only deduct a donation of a used vehicle if you itemize your tax deductions instead of taking the standard deduction. Itemization can be done by filling out Schedule A of your IRS Tax Form 1040.
You have to accurately and with due diligence determine an initial fair market value for your vehicle. If your vehicle is worth an amount below $250, you only have to write down the specifics of the donation. If your used car’s value is between $250 and $500, a written letter of acceptance of donation must be given by the recipient charity. If the vehicle value ranges from $500 to $5,000, you and the charity would have to fulfill all of the requirements above, as well as complete or have an IRS Tax Form 8283. Used vehicles with a value above $5,000 require more stringent requirements. In any event, a used car donation is great option to for a vehicle you no longer use and that could still fulfill some charitable purpose.
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