Rules for Donating a Car

If you're looking to donate a car to charity, there are a few regulations you should be aware of to ensure that Uncle Sam won't come knocking at your door. Once you've settled on a given charity, you'll also need to make sure you follow its specific guidelines for vehicle donations.

Features

The first rule for a valid car donation is that the charity to which you donate must have a 501 (c)(3) status. If you're unsure of a given charity's eligibility, you can contact IRS customer service at [phone]. Before you call, have the group's full name and headquarters address handy. You may also go to the IRS website and consult Publication 78, which lists most trusts and organizations that qualify for tax-deductible vehicle donations.

Indentification

The next regulation you'll run into is that of the identification of your donation. For a charitable gift to be valid, an actual receipt for the car needs to be issued by the receiving organization. This document should contain your name, social security number or taxpayer identification, the VIN (vehicle identification number), the date and a good-faith estimate of the vehicle's worth. Plus, the document needs to have a statement of intent of use for the car from the charity (will they be selling it, giving it to a family in need or using it as transportation for the charity itself?). This statement is important in relation to your tax deduction, as certain rules apply for different intents of use. Without this documentation, you'll not be able to properly use your donation for tax deduction.

Your Car's Actual Worth

No matter what a given charity says the car is worth, the dollar amount of its fair market value will need to have actual support. The fair market value of your car can is established by the make, model and year of your car as well as the type of engine, whether it's a manual or an automatic, has power steering, cruise control, air conditioning and other features to your specific car. From there, your mileage, your actual location (zip code) and the condition of your vehicle will change the value of you car, and, in turn, the amount of your donation. All of these factors play a part in a car's worth, which means you cannot use the highest value listed in any of the buyer's guides to claim your deduction.

Exceptions

However, there is a caveat to the rule of fair market value, and this will effect the overall dollar amount of your donation. If the fair market value of your car is more than $500, the deduction in your taxes is limited to the selling price of the car, meaning that you must wait until the car is sold by the charity to get the actual amount of your donation. This, of course, is not the case when the car is given to a person in need or the car is used for another purpose by the charity. You should then again be able to use the fair market value of your donated vehicle.

Warning

In order for a vehicle donation to be valid, the transaction will need to be completed with the transfer of the title. If they ask you to do something else, like leave the assignment blank or keep it in your name until the intent is complete, you really need to think about giving this gift to another organization. Each charity will have certain policies of their own for their donors, but most are relatively minor in regard to car donations (i.e. car must be in working order, not manufactured prior to a certain year, not over a certain mileage, and so on). If you are wondering whether a donation you've made is eligible for a deduction on your tax forms, you can contact the IRS directly at 1 [phone]. This is a different number than that used to check a given charity's eligibility. And depending on your state of residence, you can also contact the state official involved in charities.

Misconceptions

Many people are not actually aware that there is a rule on how to fill out your tax forms when using a car donation as a tax deduction. When tax time rolls around, you'll need to itemize your deductions on your tax return. No EZ forms for you. To determine whether an itemized form is needed, you'll need to calculate whether your total deductions are greater than that of the standard deductions (check the current tax year to verify the standard deduction for those filing singly or jointly). You should also be aware that your charitable donations, this would include any of the donations you've made in a calendar year, cannot be greater than 50 percent of your total income.

Types

The ability to donate a car will also be affected by the type of charity you're donating to, and must meet their policies for donation. A number of charities will require that your vehicle be in proper working order before they actually accept the gift. Yet, many will still take a car that doesn't run. Either way, the cars value must outweigh the cost of towing it to the charity's storage facility. You may also find that some charities are not interested in certain types of cars or vehicles. It isn't that they're being selective for the sake of being selective, they use the cars for different purposes and some makes or models just don't serve that purpose. After you've contacted the charity, you'll need to tell them if this will be a pick-up or a drop-off. Both modes of transportation will be convenient to you. Rarely will a charity make you jump though hoops to donate a vehicle. You'll need to clean your car of all personal belongings before the transaction is made. There have been charities to refuse a donation for a car filled with junk. Due to the nature of an organization, they may not have time to clean out a car before it is needed. You'll also need to be in possession of the car's title. If you don't have proof of ownership, most charities cannot accept the donation, which stands to reason.

Resources

• I.R.S.