The Institutions of charity who use vehicles donated for the transport of goods directly benefit from this donation. However, in many cases, the cars are sold in mass , either by their own institution of charity or by a concessionaire to raise funds for humanitarian organizations.
In the case of trading through a dealer, the institution generally receives a fixed rate per vehicle, sometimes as little as $45 dollars per car. Below are some tips for those who like to donate a car to charity. Be aware that the tax deductions of donors to donations by car can be limited to the price at which the charity sold the car.
Deduction in income tax
To receive the maximum tax deduction for your car donation and feel satisfied to know that the total value of the car will benefit many people philanthropic way, donate to a charity that will use the vehicle in its operations or transfer for a needy person.
Otherwise, their tax deduction will not be based on the fair market value, but will be limited to the amount of money that the charity receive the sale of his car. If the institution to which you is donating notsell the vehicle, ask what they want to do with the vehicle.
Look for an entity legalized
Ask if the charity institution accepts donations of car directly, without the intervention of a third party. If possible, drive the vehicle until the institution of charity that you chose, instead of using a towing service. This will allow the charity is the total value of the sale of the car. Make sure that the organization is legal and is qualified to receive deductible contributions tax.
It is important also to ask for a copy of your records and status of the foundation. Request a receipt certifying that the donation of the car was made. Learn that the donations that are not logged are one of the most common triggers for an audit of the Federal Revenue, therefore it is essential to document the value of the car and store the records.
Attestation of donation in writing
If the car is worth more than $ 500 , the donor must fill out an income tax form and attach it to your annual statement . Donors are required to submit your tax return in a written confirmation of the car donation to charity. If the institution selling the car must provide the donor a receipt that the car was sold between independent parties. Moreover, inform the selling price within 30 days.
In this case , the tax deductions for donors will be limited to the total amount the charity sold the car . The institution must also provide certification to the donor making it clear what they will do with the car, in addition to secure commitment to comply with the combined. Penalties are imposed on charitable institutions that provide for the fraudulent discoveries donors.