Record Keeping and Filing Requirements for Car Donation

Based on the amount you wish to claim as a charitable contribution deduction, you need to maintain certain files and records to manifest your charitable contributions. Following are the necessary recordkeeping and filing requisites that would be helpful.

Written Acknowledgement of the Charity

You should not forget to get an acknowledgement in black and white from the charity in case the amount you are going to claim is $250 or above. The receipt must indicate the name of the charity, a detail features (excluding value of your car) and any one of the under mentioned details – a declaration that no articles or services were offered by the charity to the contributor in return for the car donation, if it has been provided, a detail and valuation of the goods or services, if any, that the charity offered in return for the contribution, or a declaration that articles or services that the charity has given in return comprised of intangible religious use.

You should obtain the written declaration on or prior to the date you filing your return for the year in which you made the contribution.

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How to Get Fair Market Value of your Car Donation

If you are going to claim a deduction of $500 or less value, you must require evaluating your vehicle’s fair market value on the date of the contribution. Usually, fair market value is the cost a buyer would offer and a seller would take for the vehicle, when both the parties are open to buying and selling, and both parties have considerable knowledge of the relevant facts.

If you consider a vehicle pricing guidelines to ascertain fair market value, ensure that the sales price mentioned for a vehicle that is of the same model, year and make, sold in the same condition, and with the similar accessories and options, as that of your car. In addition, the fair market value of a car must not go beyond the price mentioned for a private-party sale.

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What are Tax Implications of Car Donation

The basic tax process is that IRS permits certain standard deductions from the consolidated income of an individual and according to the income range, applies some percentage of tax on the taxable income.

In addition, IRS enables certain itemized deductions and tax deduction on car donation is one such deduction. The car donation is considered to be a “non cash charitable contribution” and tax benefits on such non cash expense are offered by IRS.

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How to Find Worthy Charity for Your Car?

Given the current America's car donation system, it is easy for car donors to take advantage by donating their cars, although with a little risk that too, to the worthy charity. Following are some of the tips which can reduce that risk, and maximize the value that in fact gets to charity.  In addition it will enable you find the right charity for your car donation.

Ensure Your Intended Organization is a 501 (c) (3)

Albeit several organizations claim non-profit status, donations to 501 (c) (4) charities are mostly not tax-deductible. Ensure that your intended car charity falls under the status of 501 (c) (3) public charity.

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Simple Tips to Donate a Car or Boat to Charity

Before you pass on your car / boat over to someone, read the under mentioned tips. These will help you ensure that you are making the right moves and your donation makes a difference!

Avoid Middlemen: Number of for-profit intermediary firms promote extensively on TV, billboards etc, offering help in donating your vehicle to charity. These organizations generally keep almost 50 to 90 percent of the vehicle’s cost with them, and the charities don’t get what they should have gotten. To ward off this situation, see if you can directly donate charities you admire.

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What is BBB Charity Seal, How it Helps?

The BBB Charity Seal is a trust mark that manifests the high standards of any charity to the potential donors.  The major objective of Better Business Bureau (BBB) is to develop a marketplace where there would be trust between buyers and sellers.

Objective of BBB Accreditation

BBB Accreditation is an honor and it is offered when businesses meet the high standards for trust.  The standards for trust are an extensive set of policies and best practices emphasized on how businesses should deal with public at large. BBB evaluates businesses against the set standards – and those standards clearly speak of competence of any organization.

The BBB Charity Seal is a comprehensive recognized and trusted sign, displaying that the charity had satisfied all the BBB's 20 Standards, which includes all the important charity best practices like governance, financial management, effectiveness of self-assessment, how to use donor dollars, privacy issues, fundraising, and host of other.

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Type of Car Donation Programs

Car donation or charitable car donation is quite a common practice of giving away those cars and other types of vehicles to charity organization, which are of no use to the owner. In the US, such car donations are eligible for a tax benefit; as such type of donation of one’s asset has been quite popular. For the vehicles which goes at a value less than $500, the money of the tax deduction is evaluated from the donor's own analysis and study of the car's value, even if the charity did not get the same value from reselling the car.

Tax deductions for more than $500 of car donations are limited to the selling price of the car which is usually collected through auction.

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How to Avoid a Car Donation Scam ?

To avoid a car donation scam there are few precautions that need to be followed if you are planning to donate your car to any charity or NGO. Here are five key aspects that will enable you ascertain that your donation will be of some help to the charity when you donate your car:

Don’t Involve the Middleman
Donate directly to the charity whenever you want. Doubtful car charity donation programs usually involve middlemen. They are pleased to take your vehicle donation, sell it, give a fraction of it to the charity, and keep a big pie as ‘operating costs’.

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Key Filing and Disclosure Requirements for Car Donation

 

If you have donated a car to any charity or planning to do so, it is advisable to educate yourself about the legal binding and requirements that needs to be complied with. Under mentioned are the filing and disclosure requirements that are mandatory in car donation: 

FORM 990 SERIES (Annual Information Return)

Most charities are liable to file an annual information return – Form 990 series (990, 990-EZ, or 990-PF), divulging details about the charity's revenue, expenses, activities, and financial status. See IRS Publication 557, Tax Exempt Status for your organization, and the instructions to the annual information returns for further information.

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