Firstly, knowledge is key. There are a lot of car donation programs out there that claim to give high returns to their charity partners, when in reality the charities are lucky to receive 10%-30% of gross proceeds.
Tip #1 : Ask how much of the proceeds from the sale of your vehicle go back to the charity and it’s missions/cause. Look out for charities or organizations that are partnered with charities that only tell you the net return- this should be red flag number one.
Tip #2 : Make sure the charity is eligible to receive tax deductible contributions. The most common types of qualified organizations are section 501(c)(3) organizations, such as charitable, educational, or religious organizations. Visit IRS.gov to search for registered charities. Car Donation Wizard works with the top 501(c)(3) organizations in the nation and donating through our services guarantees that once your vehicle is sold you will be eligible for a tax deduction.
Car Donation Wizard only works with esteemed, 501(c)(3) non-profit organizations.
Tip #3 : Be sure that you get a receipt from the charity for your car donation. You must obtain a written acknowledgment from the charity if the total deduction you are claiming for a donated car is $250 or more. If a charity or an organization that works on behalf of the charity offers you a receipt before they have sold your vehicle this should be red flag number two. Tax deduction receipts should only be provided once the vehicle is sold.
Car Donation Wizard mails a tax receipt for your records following the sale of your vehicle.
Tip #4 Taxes Explained :
The IRS will only allow a deduction for the fair market value of the car. If the vehicle is sold for $500 or less the donor can claim up to $500 of the fair market value and if the vehicle sold for more that $500 the donor can claim a deduction of the selling price of the vehicle.
This can be found on the tax receipt mailed to you by Car Donation Wizard for your donation.
If the car is worth more than $500, the donor must complete Section A of IRS Form 8283 and attach it to their tax return.
If the car is worth $5,000 or more, an independent appraisal is necessary. The donor must also fill out Section B of IRS Form 8283. Take pictures of the car and save receipts for new tires or other upgrades to verify its value.
Tip #5 : Always consult your tax adviser or the IRS for more information about how you can claim charitable deductions. The IRS can answer your tax questions and can provide tax forms, publications, and other reading materials for further assistance. IRS materials are accessible through the Internet at www.irs.gov, through telephone ordering at (800) 829-3676, and at IRS walk-in offices in many areas across the country.
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