If you have already decided to take advantage of the many benefits of donating your car – the tax breaks, the hassle-free processing and the social rewards, it’s now time to actually make your donation. But how do you choose your recipient? What other things do you need to cover before making a donation?
You would be surprised at the number of pseudo-charitable organizations who just want to take advantage of your kindness. The best thing to do is get a list of accredited charitable or advocacy groups from your city hall and choose an organization from that list. Many people donate their cars to orphanages, medical and relief missionaries, homeless refuge center, and cancer treatment facilities, among others.
If you donate to an organization that turns out to be illegitimate or non-qualified, your car donation will NOT be tax deductible. Check first if your prospective recipient is a certified “public charity” by calling IRS Customer Service. Operators should be able to tell you if the organization is tax exempt or not.
Read the “Determining the Value of Donated Property,” section of Publication 561 to calculate the fair market value (FMV) of your donated car, so that you can correctly declare it come tax season. The IRS allows you to deduct the FMV by submitting full documentation. The charity that you donate to will usually do all the paperwork for you. If you want more information, you can check out Publication 526 that lists the requirements and forms you must file.
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