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Not necessarily. As the saying goes, the road to h-e-double-hockey-sticks is paved with good intentions, and it can be surprisingly easy to fumble this well-meaning act.
Before you hand one of your biggest assets over to anyone, read the following tips to be sure youre making the right moves.
1. Avoid middlemen. Numerous for-profit intermediary organizations advertise aggressively on TV, billboards and elsewhere, offering to help you donate your vehicle to charity. Heres the catch: These organizations typically keep about 50 percent to 90 percent of the vehicles value for themselves, and the charities dont get what they could have gotten. To prevent this, check directly with charities you admire and find out whether they accept car or boat donations.
2. Find a worthy charity. If the charities you normally support arent equipped to accept such donations, do some homework until you find a reputable charity that is. You can research charities track records online at this Better Business Bureau site and through Charity Navigator.
3. Check the math. If you still feel compelled to use an intermediary organization possibly because youre busy at least ask the organization how much of the car or boats value will go to charity. If the organization simply gives charities flat fees say, $100 for a used vehicle regardless of its value, or $2,000 a month your donation may not be eligible for a tax deduction.
4. Know the status of your recipient. In order for you to qualify for a deduction, the charity that gets your donation must be an IRS-approved 501(c)(3) organization. Your church, synagogue, mosque or temple likely qualifies. (Check first just to make sure.) You also can visit the Internal Revenue Services Web site and search for Publication 78 to find other qualifying non-profit organizations. (Just type 78 into the search field on the IRS home page and youll be directed to the right publication.)
5. Do the delivery yourself. Once youve identified a worthy charity, recognize that it will have to pay someone to pick up your car or boat for you. To help the charity maximize the benefit of your donation, drop the car or boat off yourself.
6. Transfer the vehicle with care. Want to eliminate all risk of running up parking tickets and other violations after youve said goodbye to your donated vehicle? Then formally re-title the vehicle to the charity, and report the transfer to your states department of motor vehicles or licensing. Never agree to leave the ownership space on the charity donation papers blank.
7. Your estimate of the donations value probably wont cut it. If your car or boat is worth more than $500, the IRS is going to want to see evidence of how much the charity got for it. (Most charities that accept these donations turn around and sell them for cash.) Youll need to get a receipt from the charity revealing exactly how much money it made.
8. Know when you can report the fair market value. You wont need evidence of the sales price if the charity keeps the vehicle or vessel and uses it in its charitable work, or if your donation is worth less than $500. Then you can report its fair market value based on listings from Kelley Blue Book and similar sources.
9. Keep a thorough paper trail. If your donation is worth more than $500, youll have to attach IRS Form 8283 to your tax return. If its worth more than $5,000, your documentation must include an outside appraisal. Youll also need proof of the donation, such as a receipt from the charity and a copy of the title change.
10. Be detail-oriented. This paper trail may seem cumbersome, but think about it: This may be one of the biggest charitable donations you ever make. By taking the time to dot the is, you can make sure that the charity gets the most benefit and you get the biggest possible deduction.
Sources and resources
How to donate a car or boat to charity. Coffeyhttp://today.msnbc.msn.com/id/15031788 admire and find out whether they accept car or boat donations. 2.
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