We heard the Salvation Army’s bell ringing yesterday, which means it must be that time of year again! While the holidays may inspire us to donate to charity, the end of the year also reminds us that giving can certainly benefit our tax situations!
Below is some general information about donating a car to charity—please consult your tax adviser with any questions about your specific situation.
Deducting your gift
You can take an income tax deduction for a gift to a qualified charitable organization, but only if you itemize your deductions on Schedule A of Form 1040. If you do not have enough deductions to itemize, your donation is still welcome, but you won’t be able to claim it on your taxes.
Make sure your charity is designated at a 501(c)(3). Some organizations, such as churches, can also receive donations. To be sure, ask your charity directly or search for it on the IRS website at http://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check. If you have determined that your charity is not a 501(c)(3), but you’d still like to donate your vehicle to a charity, simply designate one of the charities found on our website—we’ve already verified their status for you!
No one likes the endless details of tax paperwork, but Cars Helping Charities makes it easy for you! The date of your donation will be the date you called or submitted the online donation form. You’ll receive a receipt at the time your vehicle is sold (generally within 30 days), stating the exact amount of the sale. If the vehicle is sold for less than $500, you can claim the fair market value of your vehicle up to $500, or the amount it is sold for if less than fair market value. In this case, you do not need to attach the receipt to your income tax return; instead, retain it with your records to substantiate your donation.
If the vehicle sells for more than $500, you can claim the exact amount for which the vehicle was sold. You’ll need to complete Form 8283 and attach it to your 1040 with the receipt from Cars Helping Charities. In either case, Cars Helping Charities automatically provides the documentation you’ll need.
For more information regarding tax considerations, consult http://www.irs.gov/pub/irs-pdf/p4303.pdf, A Donor’s Guide to Vehicle Donations, or one of the several other helpful IRS publications listed on our website: http://carshelpingcharities.org/tax-filling-info/.