People always look for ways to go around their taxes and reduce expenses. One way to achieve this is through charitable contributions, which allow you to make a legal claim for a deduction on your taxes. More than saving money, knowing that you’ve helped others gives you a good feeling.
Donating items isn’t as easy as handing it out, though, particularly items as valuable as cars. Participating in charity works is safe, although you need to make sure that you’re doing things right. First and foremost, determine if the organization is a 501(c)(3) charity.
These charities don’t distribute the cars they receive as is. They would most likely sell or auction the car and use the proceeds to fund their programs. Likewise, they can make the cars assets of the organization. They’ll use them for the transportation needs of the people and the charity when doing their programs.
If you claim that your car’s value is over $500, charities should provide you with a contemporaneous written response. It should state your name and TIN, the car’s ID number, donation date, and statement that the charity didn’t provide goods or services for it and it’s consisted of intangible religious benefits.
Sale of Car
After the charity sold or auctioned your car for more than $500, they must provide you with a written acknowledgment within 30 days of the sale. The letter should state that your car was sold in an arm’s length transaction between unrelated parties, date of sale, gross sale proceeds, and your deduction can’t exceed the gross proceeds from the sale.
IRS Form 8283
As per the law, you should file IRS Form 8283 if the deduction for the year exceeds $500 for all non-cash gifts, particularly your car. You are to complete Section B of Form 8283, though, as the tax deduction is over $500. The charity, on the other hand, should complete a portion of the form and sign it.
Taking an old car to wrecking companies for disposal is not always the solution. There is a way to donate your vehicle to charity with as little trouble as possible. Here at Cars for MADD, we accept all types of vehicles in nearly all conditions as donation. Whether it’s a car, van, truck, RV, motorcycle, boat, or farm equipment, we are the organization you can turn to. Contact us today and let us be at your service.