Interested in donating a car to a non-profit organization and receiving a tax deduction? Here are some important things to know. In 2005, the IRS changed the rules on charity car donation. Currently, in most cases, a person may only claim the donated car’s actual selling price as a deduction.
How to Donate an Automobile: Choosing a Charity
The IRS urges people interested in charity car donations to make sure the chosen organization is legitimate. “Otherwise, your deduction will not be tax-deductible,” they warn in A Donor’s Guide to Vehicle Donations. A list of qualified organizations is available on the IRS website.
Know that many religious organizations, such as churches, synagogues, mosques and temples are not listed but are still considered qualified organizations by the IRS. If uncertain, double-check with the religious institution to find out whether they are qualified or not. Most importantly, know what the charity does with car donations. This affects the size of the tax deduction.
Charity Car Donation Scenario: They Sell the Vehicle
“Charities typically sell the vehicles that are donated to them,” notes the IRS. In this case, the vehicle donor is entitled to claim the actual selling price. If someone donates a car to a charity and the organization sells it for $3,000, the donor may claim no more than $3,000. Additional rules are that the non-profit organization:
does not make any material improvements to the vehicle
not use the car for long-term charity work (such as delivering meals, etc.)
must sell the car to someone other than a needy individual
Non-profit Automobile Donation Scenario: They Use the Vehicle
If a charity uses a car donation to perform charitable work, the car donor may claim what the fair market value of the car was on the day he or she donated it. If a car has a fair market value of $4,700 when the owner donates it to a qualified non-profit which will use the car to deliver meals to shut-ins, the donor may claim $4,700 as a deduction.
If the charity’s work is based on giving or selling cars to needy individuals, the owner can also claim the vehicle’s fair market value as a deduction. Charity Cars, Inc. is an example. On their website, they explain that if a car is in good enough condition to serve as a program car for a needy person, the donor may claim fair market value. If the car isn’t suitable as a program car, Charity Cars will simply sell it. In this case, the donor may only claim the amount the car sold for.
Determining Fair Market Value for a Donated Automobile
The car’s owner is responsible for determining the fair market value of his or her vehicle before donating it. Charity Cars recommends Kelly Blue Book as a resource. The IRS reminds car owners that they must find a price for the same make, model, accessories and condition as their present car. “Moreover, the fair market value of a vehicle cannot exceed the price listed for a private-party sale,” they advise. A car about to be donated to charity must have any appraisals done at least 60 days before donation.
Car Donation to Medical Research Charities
Every year, thousands of charity car donations occur with many donors receiving a tax deduction. By understanding how to donate a car and through identifying a reputable charity, a donor can receive a tax benefit while helping others.
An important first step is to identify a charity of interest. Many medical charities accept car donations as a means to attain funding. In most cases, donated cars are resold and the proceeds divided amongst various programs that fund research, patient services, or advocacy. By taking the time to find a charity of interest, a donor can have a more meaningful contribution.
Donate a Car for Cancer Research
The American Cancer Society accepts cars for donation in a program called Cars for a Cure. Donated vehicles are resold and the proceeds donated to help fight cancer in a variety of ways. The cancer car donation program accepts a wide variety of vehicles including cars, trucks motorcycles, RVs, boats and trailers.
Vehicles must be in fair condition and donors should expect the donation process to take 1 to 1 1/2 weeks depending on the time of year. According to the American Cancer Society website, proceeds from the car donation sales are used to fund cancer research, education, advocacy initiatives and patient services.
Donate a Car for Diabetes Research
The American Diabetes Association car donation program accepts vehicles of all types, even those which do not run. The organization does suggest calling to inquire first as the car value must be enough to offset the cost of towing.
Car donations are accepted in all 50 continental states and Hawaii. Donations can be processed within 3 to 4 business days, depending on location and time of year. Donate a car to diabetes and help fund diabetes research, information and advocacy.
Donate a Car for Kidney Research
The National Kidney Foundation accepts cars for donation in a program called Kidney Cars. Kidney Cars is one of the oldest and has accepted over 685,000 vehicles over its 25-year history and raised $150 million. Every day, over 100 cars are donated to the Kidney Cars program.
Kidney Cars will accept non-running vehicles and can process most car donations within a matter of days depending on the donor location. Almost any type of vehicle will be considered and will be picked up free of charge.
Car Donation to Help Medical Research Charities
Many people wonder where to donate a car and many opportunities exist. While the tax deduction is one motivation, consider also finding a charity to support. Organizations like the American Cancer Society, American Diabetes Association and the National Kidney Foundation use car donations to help fund programs and services. By donating to a medical charity, proceeds from the car donation can benefit many people through increased research, services, and advocacy.
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