Donating a Car
Every now and then, when it comes time to purchase a new car, not everyone can sell their previous car. Maybe it is too old to sell and no one will want to purchase the car or maybe you just want to donate the car for the good of the community. Donating a car doesn't have to be as difficult as it sounds. There are a few important steps to take when donating a car, which is tax deductible. Cars can be donated to a variety of companies, including Purple Heart, and other various charities across the country. The charity will then use the car to help transport goods or members of their charity to community events. The charity also has the option of selling all of the cars they receive via donation. Most charities will usually get back only $45 per car but it is money that they put right back into the operation of the charity.
When donating a car to a charity the person donating the car might only receive the amount of money that the charity received when it was sold by the charity. If you decide to donate a car to charity make sure you have all of the proper paperwork required to file the deduction with the IRS. The first step is to make sure that the charity is able to receive tax deductible donations in the first place. Ask the charity for a copy of their IRS letter of determination. This letter verifies their tax exempt status. Keep the copy of this letter in your records. The next step is to obtain a receipt for your donation. Always document the value of the car and keep records of the value to avoid an audit performed by the IRS. The most common audits are triggered by non-cash donations.
Section A of IRS Form 8283 should be filled out by the person donating the car if the car is worth more than $500. This form must be attached to the donating person's tax return. Also to be filed with a tax return is a written acknowledgment from the charity that received the donation. If the car is sold by the charity, the charity must provide the donor with a certification of the sale and for how much it was sold. The return on the donation to the donor will be the same amount as the amount received in the sale by the charity. If the car is not sold the charity must provide the donor with the same document but this time the document will explain how the charity will improve the vehicle or how the vehicle will be used by the charity.
If the vehicle is worth more than $5,000 the donor will have to fill out Section B of IRS Form 8283 and attach it to his or her tax return. Also, an independent appraisal will need to be performed for vehicles of this value. But if the car is worth less than $5,000 the donor should consult such guides as the Kelley Blue Book and Hearst Black Book for market value.
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