Car donation program
Why should any one consider donating a car?
There are quite a few advantages in donating a car as compared to selling it in the used car market. The donor need not do any thing apart from giving the nod to the charity. If the charity accepts the donation it takes care of all the paper work. No hassles of getting the car repaired or even in some cases towed to the charity!
In selling the owner has to first get the car repaired, some times the repair costs can be prohibitively high. Selling can be quite time consuming. It may take weeks or even months before the right buyer comes around. If some one tries to trade in the old car, the dealer discounts can be very low and unprofitable.
Before approaching a charity a donor can choose the type of charity to which he or she wants to donate. They must also verify the credentials of the charity, their record of activities and confirm their registration under the section 501 (c) (3). If they are not properly licensed the donation is not eligible for tax exemption. Once a donor is satisfied on these counts he can approach the charity with his offer.
The major criteria for a car donation to be accepted are:
- The car must have proper title / ownership record
- It must be in a towing condition
- The tires must be inflated
- No major parts should be missing
Once these criteria are met, most charities arrange for the car to be picked from your place. There after it is a matter of time before the charity organizes for the car to be auctioned off. The charity might do these themselves or may involve a for-profit, third party to sell the car.
However, the onus of determining the fair market value of the car is on the owner. They can consult the "blue books" of various trade organizations that circulate the market value of cars based on their age and specify the resale value of the cars, including brand / make / year of manufacture etc.,
In either case, the charity issues the donor a certificate of donation specifying the amount for which the car has been sold. The donor can then claim the tax deduction. The responsibility of issuing this certificate is on the charity. Usually this certificate is mailed to the donor within 30 days of the sale of the car.
The tax receipt certificate should include the charity's name, its Federal Tax ID number, the donor's name, date of donation, the year, make and model of the donated vehicle. It is also important for the donor to itemize their deductions on their federal and state income tax returns. If the total deduction for the vehicle donation is more than $500, the Section A of form 8283 must be filled up and attached with the tax return. The proof of car donation must be maintained by transferring the title of the car to the charity.
All in all, the car donation program can be a very satisfying experience for a donor when the proceeds of the sale are properly utilized by the charity and the donor gets the benefit of tax deduction.
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