Brightly decorated trees, freshly baked cookies, eggnog, giving and receiving. When it comes to the holiday season, vehicle donations are a way to help others less fortunate and get in some end of the year tax deductions. However, you should take some things into consideration to make sure that your gift giving reaps the greatest benefits for you and the charity.
Find out how the charity benefits from the donation. Will they use the vehicle? Will they sell it and receive the full amount of the sale? Or will they use a broker and only receive a percentage of the sale? These arrangements can affect your tax deduction, so you might want to check section 501(c)(3) of the Internal Revenue Code and the Cumulative List of Organizations in IRS Publication 78 at your public library or at www.irs.gov/.
For more filing information for 2008, take a look at the Comprehensive Tax Guide from the IRS.
Be a smart donor and follow this checklist to maximize your donation:
Check out the charity at www.bbb.org/ or www.give.org/. Find out if the charity is properly registered with the government agency in your state that regulates charities (usually a division of the state’s office of the attorney general).
Verify that the recipient organization is tax exempt as a charity.
Find out how the charity financially benefits from the resale of the car.
If the car is worth more than $5,000, get a written professional appraisal.
Make sure the title of the car is transferred to the charity’s name and keep a copy of this record.
For tax records, take a photo of the car and keep copies of current classified ads or guide value estimates for similar vehicles. (For more deductibility information, get a copy of IRS Publication 561, Determining the Value of Donated Property.)
Dec. 17, 2008.