For many people (over 1 million a year) donating a vehicle is second nature. When considering this type of donation there are many things he think about. The Internal Revenue Service encourages people to take care when making a car donation.
Most rules were recently changed 2004. One of the biggest rules the IRS emphasizes is that the charitable organization is qualified. It is up to the taxpayer to make certain that they contribute their car to an eligible organization otherwise their donation will not be tax deductible. Eligible organizations are everywhere they are classified as a 503C nonprofit organization within the Internal Revenue Service’s tax code.
Taxpayers can use the IRS’s main website to verify that a charity is qualified by searching publication 78. Publication 78 is an annual cumulative list of charitable organizations that are eligible to receive deductible contributions. This publication is also available in many public libraries, and taxpayers may also request a copy from the government entities customer service line at 1-877-829-5500.
The IRS requires that you itemize your deductions in order to take a deduction for an automobile donation. Many taxpayers do not itemize deductions, if you do not do this, you will not be able to write off your vehicle donation.
In order to deduct the cars fair market value from your taxes, fair market value must be calculated. There are many factors to consider when establishing the value of used vehicle. There are used car buying guides that contain step-by-step instructions which will help readers make decisions relating to the value of the car and its accessories. Mileage, age, mechanical condition and market trends all determine what a vehicle is worth. You can also check out Kelly Blue Book.
For used vehicle donations all taxpayers must record accurate documents relating to the car donation. This is to record information related to the cars fair market value. Comprehensive recordkeeping requirements will vary depending upon the value of the contribution and the amount of the charitable deduction IRS publication 526 explains all of the details and requirements for the types of receipts all taxpayers will obtain along with the forms that must be filed.
If there are any questions about whether contribution is deductible donors are encouraged to call the IRS at 1-800-829-1040. There are also forms an IRS publications available at IRS.gov.
For more information following guides from the IRS’s website:
- IR-2005-149: IRS Reminder: Requirement of Written Acknowledgement for Donated Cars
- Publication 526, Charitable Deductions (PDF 177K)
- Publication 561, Determining the Value of Donated Property ( PDF 101K)
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