Many charities accept cars as donations. Many of these charities will accept cars whether they are running or not and will pick up the donation to save the donor the trouble. This can be a benefit for not only the charity but the donor as well. What many donors are unaware of, however, is that many charities will accept other vehicles as donations. Alternate vehicles may include:
Beyond these possible donations, some charities open the list of options even wider. The expanded list includes vehicles such as:
- Jet skis
- Tractors and other farm equipment
- Dump trucks and cement mixers
- Even airplanes!
When charities first began accepting vehicles as donations, it was easy for donors to claim the charitable deduction from their taxes. The charity simply provided the donor with a receipt for the full market value of the car. Today the IRS rules are much more stringent with the definition of “full market value” and have made the process to file the deduction much more cumbersome. Here is an overview of some of the additional steps required.
1. The donation made must be to a charity that meets certain IRS requirements.
The charity must be recognized as a 501(c)(3) organization by the IRS for your deduction to be recognized by the IRS.
2. The donation must be filed as an itemized deduction.
This means the use of a regular 1040 form. If you are used to using a 1040EZ, this will mean much more work for you.
3. Full market value is no longer based on an estimate.
The amount of deduction can only be equal to the amount for which the car actually sold.
As you can see, things have become more complicated. It could be that donating the car may not benefit you or the charity. Want to learn more about how to make this a smoother and more beneficial transaction? Check out "When Does Donating a Car Make Sense”.