Donating your car to charity is a thoughtful and generous act. It’s also one that can save you some money on taxes. Many non-profit organizations that take automobile donations advertise it heavily, but doing research is necessary before you hand over your keys. Here’s what you should know if you want to find the best charities to donate your vehicle.IRS Guidelines
There are general guidelines about charitable donations you should know before donating your car. Taxpayers can only write off the donation of a car if they itemize deductions. There are also limitations on charitable contribution deductions. Your donation cannot exceed 50% of your adjusted gross income.
Besides these general guidelines, the IRS has tax rules for how much you can deduct for donating a vehicle. You can and should review the guidelines on the IRS website, but the general rules are as follows:
Beyond these basic guidelines, the IRS publication has extensive information on determining the fair market value of the vehicle.Non-Profits That Accept Car Donations
Some charities advertise on TV and radio that they accept car donations. But these aren’t the only nonprofits to take donations of used cars; in fact, a wide range of charities will accept car donations. Keeping that in mind, a good start may be to look for charities whose causes you find noble (and whose reputations are spotless), and to check their websites to see if they accept car donations. It may be the case that organizations you’re already supporting through more traditional donations also accept vehicles.
Some will make direct use of your car, such as a charity which delivers meals to the homeless or needy. Understand, though, that most charities will not ultimately use your car. Instead, they’ll sell it and use the proceeds to fund their programs.
While there are some charities that act as a third party for other non-profits, it’s best to avoid those groups. When you donate directly, you can find out exactly how and when the organization will use the donated vehicle.Check That the Charity is Legitimate
Be sure you’re donating to a legitimate and reputable non-profit. Look for groups that have a longer history and whose information is in either the IRS’s tax-exempt organization database or a national charity database. Only the IRS can designate a group as a 501(c)(3) organization. Even if you see the status mentioned on the group’s website or social media, you can easily confirm its tax-exempt status on the IRS website.
Beyond tax status, remember that not all non-profits are created equally. Many people like to look at a charity’s record of spending to ensure that they will use your donation effectively. Sites like Charity Watch and Charity Navigator can help you confirm that the charity you’re considering has a good reputation. Don’t make the mistake of giving to a bad charity.Transfer the Title Accurately
Whether you donate a car or sell it to an individual or corporation, you’ll need to transfer the title properly. If you do not, you are legally responsible for parking tickets, accidents or crimes committed by the next owner.
All legitimate non-profits will ask that you transfer the title to them. They will not ask you to leave that information in the donation paperwork blank. Some of the non-profits will sell your used vehicle at an auction in the future. If the car sells at an auction and the new buyer does not register the car, you are still legally responsible for any incidents or crimes.Paperwork is Key
Make sure you receive paperwork for your donation and maintain it. Scanning copies or taking photos and storing your files in the cloud ensures that you don’t lose them. They’ll be especially important for any possible tax audits or other purposes.
The IRS will require written acknowledgment from the charity if the value of the car is more than $250. If the car is valued at more than $500 but not more than $5,000, make sure to fill out Section A of the IRS Form 8283 and attach it to your yearly taxes.More on Tax Planning
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The post How to Find the Best Charities to Donate Your Vehicle appeared first on SmartAsset Blog.
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