Feb 19, 2013: For many of us, our cars are prized possessions. As all good things come to an end, so does a car. Maybe it is time to get a bigger or better car for the family. Perhaps it has run a good 150k miles. Whatever be the reason a day might come when we have to part with our dear automobile. If it has a good resale value selling it to a private party or a dealer is an option. However we do have another choice - donating it to a charity for a good cause. Even if the car is not in a proper running condition, we can still donate it. In most cases such a donation does have a benefit in the form of a tax deduction. However, there are few things to watch out:
- Not all charities are eligible to receive tax deductible contributions.
- We can check which organizations are eligible to receive tax deductible donations (courtesy IRS's official website).
- We could choose an organization whose philosophies and interests match with our own. It should not be difficult to find organizations which genuinely care for people and work on projects that are close to our hearts.
- To verify an organization’s status we may call the IRS CustomerAccount Services division for Tax Exempt and Government Entities at 877-829-5500 (toll-free). It is necessary to provide the correct name of a charity. Knowing the charity’s address is also helpful.
- Donations to all charities may not allow us to claim tax deduction equal to the fair-market value (FMV) of the car.
- Due to recent changes in IRS rules we may not be able to claim fair-market value for our donations. Only donations to certain types of charity organizations will qualify. For others charitable organizations, we'd have to settle for the actual sale price at which our donated car was sold by the charity.
- If we care about the fair-market value for tax deduction purposes we should ask the charity if they qualify.
- For car donations valued at $500 or more, we should get a receipt. It would wise to keep it safely along with other tax records.
- Here is an IRS publication (pdf file) that has lot of helpful information.
Image Source(s): iStockPhoto
