IRS GUIDELINES FOR VEHICLE
DONATIONS
"Donors should understand the way
that the American Jobs Creation Act of 2004 will alter the rules
for the contribution of used motor vehicles, boats and planes
after Dec. 31, 2004.
If the claimed value of the
donated motor vehicle, boat or plane exceeds $500 and the item
is sold by the charitable organization, the taxpayer is limited
to the gross proceeds from the sale.
Under the new rules, the
charitable organization must provide an acknowledgment to the
donor within 30 days of the sale stating the amount of gross
proceeds. Alternatively, if the charity significantly uses or
materially improves the vehicles, the charity must certify this
intended use and duration and provide an acknowledgment to the
donor within 30 days of the contribution. If the charity
significantly uses or materially improves the vehicle,
generally, the donor may deduct the vehicle's market value."
SUMMARY OF CAR DONATION TAX
LEGISLATION
- The charity that you donate
your car to should provide a receipt for your car donation
proving that your vehicle was donated to an IRS registered
charity.
- When you donate a car to
charity and your vehicle is sold by the charity you can claim
a tax deduction for the sale value of your donated vehicle.
For vehicles that sell for $500 or less the charity will
simply provide the original pickup receipt and you can claim
up to $500 for your car donation according to the actual value
of the donated vehicle.
- If the sale price of your
vehicle donation is more than $500, then you will receive a
second receipt from the car donation charity with the actual
sale amount -- and you can claim the full amount of the
vehicle sale as a deduction.
- However you are permitted to
claim the full Fair Market Value of your car donation if the
vehicle falls into one of these categories:
- Significant repairs are made
to the vehicle by the charitable organization before the car
donation charity sells the vehicle.
- The charity uses the vehicle
donation for its nonprofit purpose.
- The vehicle is sold at a
reduced price by the charity to low income families as part
of their charitable purpose.
OTHER HELPFUL IRS
PUBLICATIONS AND FORMS
A Donor's Guide to Vehicle Donations:
A little booklet that helps walk you through each step of the
donation process.
IRS Publication 561: Determining the Value of
Donated Property: This publication is
designed to help donors and appraisers determine the value of
property (other than cash) that is given to qualified
organizations. It also explains what kind of information you
must have to support the charitable contribution deduction you
claim on your return.
IRS Publication 561: Appraisals:
Generally, if the claimed deduction for an item or group of
similar items of donated property is more than $5,000, other
than money and publicly traded securities, you must get a
qualified appraisal made by a qualified appraiser, and you must
attach an appraisal summary (Section B of Form 8283) to your tax
return.
IRS Form 8283 : IRS
form for non-cash charitable contributions.
IRS Publication 1771 - Charitable Contributions -
Substantiation and Disclosure: This
publication explains the federal law for organizations (such as
charities and churches) who receive tax-deductible contributions
and for taxpayers who made contributions.
IRS Charity Search:
Locate an official IRS registered charity searching by charity
name, city and state. |
