Charity Vehicle Donations – 5 Tax Tips for Charity Vehicle Donations

When people make charity vehicle donations they usually expect some sort of tax break in return. Generally speaking they usually get one, though some may discover that the amount of their tax relief is smaller than anticipated. Before donating a vehicle to charity however, read through our selection of important things to consider, as though you can donate any kind of vehicle, not all charities are entitled or approved to receive them. Below is a listing of our top 5 tips to charity vehicle donations.

Charity Vehicle Donations Tip #1

The first things to consider before making any charity vehicle donations are the laws that govern them. The year 2004 saw a change in charity vehicle donations laws due to the high amount of inflated claims sent in by those donating them. Overstating their vehicles worth has led to a $500 threshold being placed on most returns, and in other cases the amount claimed is limited to the amount that the charity is able to sell the vehicle for. Your claim must also be filed for the year that you donate the vehicle, and for that year only. For instance, if you donate a car in November of 2011, it must be claimed before December 31, 2011.

Charity Vehicle Donations Tip #2

It is critical that you make sure your chosen charity is eligible to receive your gift. Each charity is given a "Letter of Determination" by the IRS (Internal Revenue Service), which governs what gifts they can receive, and the value of any contributions. Once a charity has applied for charitable status, the IRS sends them this document indicating which section of the Revenue Code they fall under and must adhere to.

Charity Vehicle Donations Tip #3

A receipt must be sent along with your claim to the IRS when filing tax returns, so it is critical you secure one from the organization you donate to. Previously, tax payers needed only to keep the receipts on file in case it was their claim was questioned by the IRS, but now must be included with your claim.

Charity Vehicle Donations Tip #4

The IRS inspect non cash donations extremely carefully, so in order to not needlessly alert them, make sure that you document the make, model and registration numbers of any donated vehicle clearly and accurately. This allows the IRS to designate a fair market value to your car or other vehicle and helps them to against inflated claims.

Charity Vehicle Donations Tip #5

Get certification of the vehicle's sale from the charity. This is quite important as the charity is obligated to provide you with the amount they sold your car for within 30 days of the sale. If the vehicle is not sold, they must still give you certification of the vehicles receipt by them. Some charities may use the vehicle for awhile before selling it, in which case you may still be entitled to receive a claim for the fair market price at the time of donation, but only if you possess the required documentation. The charity is also required to present you with documentation stating that they don't intend to sell the car if choosing not to do so, and what repairs or upgrades it intends to make to it.

In addition to the above, take exterior and interior photographs of the vehicle, save any receipts for repairs or upgrades you may have for it, and keep in mind that you are responsible for determining the value of your auto and related claim, not the charity. Following this advice will ensure you get the best benefit from any charity vehicle donations you make.