Holiday Inspired Car Donations

donate a green car

This 2001 green Mazda Miata was generously donated in Allentown, NJ to Car Talk’s WFYI radio station.

donate a red and white car

This 1998 red and white Ford F150 was generously donated in Maize, KS to Habitat for Humanity’s Cars for Homes program.

Silver and Blue Donated Car

This 1996 silver and blue two-toned Chevrolet G20 Bonaventure Van was generously donated in Norman, OK to the American Cancer Society’s Cars for a Cure program.

donate an rv to charity 4

This 1994 blue and white Holiday Rambler Illumilite RV was generously donated in New York, NY to Habitat for Humanity’s Cars for Homes program.

donate a car to charity 15

This 1985 Mercedez-Benz 300 was generously donated in Harrisburg, PA to Car Talk’s WITF radio station.

End of the Year Tax Deduction Information for Your Car Donation

For some households, a car donation may be the single largest charitable gift made during the year, or ever. This is all the more reason to make sure that the donation is being used for the greatest charitable benefit and that you can take full advantage of any potential tax deduction.

In order to take a tax deduction for donating a car, boat or other vehicle, there are a number of other things you should keep in mind. First verify that the recipient organization is tax exempt as a charity under section 501(c)(3) of the Internal Revenue Code. To verify that a charity is eligible to receive contributions deductible as charitable gifts, you can do one or more of the following. See if the organization is listed in IRS Publication 78, the Cumulative List of Organizations, which is likely to be available at most large public libraries. Visit the online version of IRS Publication 78 at http://www.irs.gov/app/pub-78/. Or, ask the organization for a copy of its tax exempt status determination letter. (Note that churches are not required to apply for exempt status, and may not have such a letter or be included in the mentioned IRS publication. A car donation to a church, however, would still be deductible.)

If the organization is a charity, you can deduct only the fair market value of your car donation. In other words, this is the price the car would sell for today in its current condition. If the used car is not in good condition and needs significant repairs, don’t believe promotional promises that claim you will be able to get “top value” for your car donation based on one of the latest published guides that show the average regional prices for various used cars. If you are claiming that the car is worth $5,000 or more, you will need to get an official outside appraisal in order to substantiate the claimed value for the IRS.

Also, if you are claiming a car donation of $500 or above, you will need to complete and attach IRS Form 8283 to your tax return. For your records, you also will need proof that you made a charitable gift. The best evidence is to transfer the title of the car to the charity and keep a copy of this document. This title change also will help you avoid potential problems that can occur if the car is somehow parked illegally by the organization or is involved in an accident or other mishap before the charity is able to resell the vehicle.

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Cars, Homes and Tax Deductions

By Brett Hersh – Let’s Talk Taxes , journal-news.net

The economic drought has stunted many nonprofits’ ability to serve their communities – just when their services are most needed.

As traditional donation streams dry up, charities are reeling to uncover new revenue springs.

One example of a creative, business like solution has been Habitat for Humanity’s Cars for Homes Program. This program allows for the donation of virtually any vehicle running or not – to help families obtain affordable homes and shelter. The Cars for Homes Program combines charitable giving with an extraordinary level of customer service.

Want to rid the driveway of the unused vehicle you must still pay insurance on (or – as in my case – the “oil-dripping eyesore” the Missus wants gone), help your local Habitat for Humanity organization, and get a potential tax deduction? It’s as easy as making a phone call or visiting a website.

How does it work?

Habitat for Humanity has teamed up with a company named Advanced Remarketing Services, Inc. (ARS) to collect, process and properly report all donated vehicles to the IRS and the donor. Vehicle donations (which can include boats, RVs, airplanes – even farm and construction equipment) are made by calling (877) 277-4344 or by visiting CarDonationWizard.com. Once the vehicle’s title is received, an ARS representative will be out to pick up the vehicle on behalf of Habitat for Humanity.

Does the condition of the vehicle matter?

Habitat for Humanity will accept most vehicles as long as they have four inflated tires, are in one piece and the vehicle’s value exceeds the cost of towing and transport.

How much can I deduct on my taxes?

Be aware: the tax rules regarding vehicle deductions changed a few years ago but can still result in a tax deduction for those who itemize deductions on schedule A. Prior to 2005, taxpayers could simply claim the vehicle’s fair market value (FMV) obtained from a reference guide such as Kelley Blue Book. Since 2005, however, the rules have become more strict and complex. The deduction amount allowed (if over $500) depends on how the organization uses the vehicle. The charity reports this use to both donor and the IRS via Form 1098-C, Contributions of Motor Vehicles, Boats and Airplanes.

How the vehicle deduction is calculated

Outright sale by charity: If the vehicle is sold by the charity to a disinterested third party, the deduction is limited to the proceeds from the sale. The charity reports this amount on Box 4c of Form 1098-C.

Improvements prior to sale

If the charity makes significant improvements to the vehicle (repairs that substantially increase the vehicle’s value), the donor will be able to deduct the vehicle’s FMV as of the date the contribution was made. The charity notifies the donor and IRS of these improvements by checking Box 5A and describing the improvements in Box 5C on Form 1098-C.

Sale or transfer to needy individual

If the charity sells or gives the vehicle to a needy individual, the donor will be able to deduct the vehicle’s FMV as of the date the contribution was made. This is true even if the charity sells the vehicle for less than its FMV. The charity notifies the donor and IRS of these improvements by checking Box 5B on Form 1098-C.

Significant use by charity

If the charity retains the vehicle for use in its charitable purpose, the donor can deduct the vehicle’s FMV as of the date the contribution was made. The charity notifies the donor and IRS by checking Box 5A and describing the vehicle’s use in Box 5C on Form 1098-C.

These reporting requirements apply when the vehicle’s “claimed” FMV exceeds $500. If Form 1098-C is not received, the donor cannot deduct more than $500 for the vehicle. If the donor is allowed to deduct the vehicle’s FMV, they must be able to substantiate the deduction claimed. Donors are not entitled to deduct the value listed in any valuation guide unless they can prove the vehicle’s condition warrants the claimed value.

This article shares Habitat for Humanity’s Cars for Home’s Programs and information on deducting donated vehicles (including boats and airplanes) to charity.

There remain, however, many tax limitations not included in this article. As always, please remember that this or any article does not constitute or replace the advice of a qualified professional. If you have any questions regarding your charitable giving or any other tax issue, please feel free to call our office at (304) 267-2594.

- Brett Hersh is the owner of HBS TAX and an enrolled agent with the IRS. Brett is licensed to prepare all tax returns and represent taxpayers before the IRS. He is also a trainer for Lorman Education and Dave Ramsey’s endorsed provider for accounting and tax services for the region. He can be reached at (304) 267-2594 or through www.hbsbusiness.com.

Read the full article

Car Talk: How a Motorhome Became “Morning Edition”

An Alaskan adventure, a grand tour of national parks and a trip down the California coast. This Coachmen Santara has been places! It’s taken Doug Van Solkema and family from Escondido, CA, all around the country. According to Doug, traveling in the camper means, “Safe travel and an incredible experience. The vacation really begins when you leave your driveway.”

“Sweetie, I think we made a wrong turn in Chicago. I don’t see any beaches.” (Flickr photo by YGX)
Now this camper is going to take all the listeners at KPBS, San Diego, to new places, too. How? It’s being turned into great radio!
That’s because Doug’s family decided to donate it to KPBS. “Over the years we have greatly appreciated KPBS and their quality programming,” Doug says. And now the $5,650 in proceeds from the sale of Doug’s camper will go directly to supporting the programming that the family has enjoyed all these years.

How was the donation process? “My in-laws suggested using the Car Talk Vehicle Donation Program. It was a very easy process,” Doug says.

Just goes to show that in-laws aren’t wrong all the time.

Can’t wait to get on the road again.

Just How Easy Is Car Donation to Charity?

If you’ve got questions on the vehicle donation process, we’ve got answers. Vehicle donation is as simple as submitting a vehicle contribution form via the web OR over the phone (877-709-2277), whichever is convenient for you. It takes just a few minutes and some basic information about the vehicle you choose to donate. Before you know it your car donation will be one of the many reasons you bring a smile to a family in need.

Once your contribution form is complete you can simply return the required forms to our processing center. Your vehicle information is then assessed and we remarket your vehicle to get the highest possible return. You will be contacted by one of our fast and courteous towing facilities closest to your area where arrangements are then made to schedule a pickup. We stay in contact with you, the donor, throughout this process.  Once your vehicle is picked up and sold, you will promptly receive a receipt stating your deduction amount. This receipt can be used in conjunction with your income tax. We strive to bring the best customer service and make this process as smooth as possible.

For more information on our charitable partners visit our charities page.

Other Posts You Might Like:

Everything You Need to Know About Car Donation

Keeping Your Donation Information Safe