10 things you should know before donating your vehicle to charity
Vehicle donation has become a massive business as the donors are tempted by the tax deduction.If you are planning to donate your used vehicle to Charity, here are a few things you should know so as to maximize the amount which is actually going to reach the charity and to minimize the risk involved .
1. Does your charity directly accept vehicles as donation? : Try to avoid any for-profit intermediary organizations to get involved in your donation procedure. These organizations promise you of helping charities by your donation but a huge sum from your donation goes into their pocket. If you are able to find a Charity that can handle the vehicle transactions itself, chances are they can keep 100% of the profit they earn.
2. Check if the Charity to whom you are giving your automobile does the work you respect : You want to make a charitable donation so you just can’t give your vehicle away to any organization. Find a charity that does the type of work you like and that the Charity performs well.
3. You can cut the cost of pick-up : As you are trying to help a charity, you can further cut the burden of cost on them by driving your vehicle directly to them. Otherwise, they have to pay someone for picking-up your vehicle.
4. You can maximize the amount received by the Charity: The amount that has to be given to respective charities by the intermediary agencies is not fixed by the Internal Revenue Service (IRS). This amount is negotiated by the charities and the agencies. You should try to find such an agency that will give the maximum portion of profit to the charity. You can also confirm with the charity if they have received the amount which the agency has promised you.
5. You must ensure that the organization to which you are donating your vehicle is 501 (c) (3) : Though a lot of organizations claim that they are non-profitable, but if they are 501 (c) (4), then the donations made by you toward them won’t get you any tax deductions. These organizations are political. You must make sure that the recipient of your donation has 501 (c) (3) status.
6. Transferring your vehicle to the nonprofit organization appropriately : Make sure to transfer your vehicle properly to the charity. If you are told to leave the “Assignment of Ownership” space blank on the papers, do not trust that charity and find another. You have to formally sign and handover your vehicle to the charity otherwise you will be held responsible for any offence or crime done by using the vehicle.
7. Valuing vehicles precisely : The Internal Revenue System (IRS) takes a lot of care about how the taxpayers are valuing their vehicles. Audits have been increased in the area of vehicle donation. Now, the tax deduction is decided after the selling of the vehicle when the charity sends a receipt of the exact amount at which the vehicle was sold in auction.
8. Completing your paperwork correctly: Since it is a non-cash donation, you should keep proper documentation of your vehicle donation. If its cost is over $250, get a written acknowledgement from the charity, if the cost is over $500, complete section A of the IRS Form 8283 and is the cost is above $5000, complete section B of IRS Form 8283.
9. Using the Fair Market Value (FMV) for your vehicle: You should use the FMV when the charity is going to use the vehicle instead of selling, your vehicle is sold at a discounted rate, the worth of the vehicle is less than $500.
10. Take your time so that not only you but the Charity also gets benefitted : If you find the right reputable charity and keep the above mentioned points in mind, then not only you but the charity as well can get benefitted.