How Charities handle Donated Autos, Boats and RVs
The reason behind the fairly recent rule changes that the IRS enacted on vehicle, boat, trailer and RV donations was to help make donations more profitable for the actual charity receiving the vehicle. The charities have been the center of attention as far as car donators were concerned, which is why donating happens in the first place. More money is now going to the charities receiving donated cars than to any third party for-profit organizations that handle sales.
Though non-profit (NPO) and charity organizations have been taking durable and appreciated goods as donations for a long time, a major change in the tax laws that govern vehicle donations in 2005 has led to a new set of documentation procedures that you can be expected from the charity organization you pick.
When you make contact with the charity organization of your choice or answer an ad calling for your unwanted or unused boats, RVs or autos, you will often be asked to vow for its condition. You ought to also be asked about the make and model of your automobile, RV or boat. This will help the charity establish if the vehicle is likely to require an independent appraisal or not. This independent appraisal must be carried out within 60 days of the title transfer and must be done by an authorized appraisal agency, as approved by the IRS.
If a non-cash donation is likely to be valued at $5,000 or greater, an appraisal is a mandatory part of the documentation that you’ll be required to present to the IRS along with a fully filled in Form 8283 (section B). As well it’s often a good idea to take some photos of donations valued at over $5000 to your favorite charity organization.
The next most important thing you can expect from your charity organization of choice is a receipt of title transfer and a statement of intent. They are required to deliver such documents to you within 30 days of receipt. Generally, the better the condition of the vehicle you’re donating, the more likely it is to be used, as is, rather than being sold at auction. This means that you have a much better chance of being able to claim a much higher legitimate deduction.
When you receive your invoice of intent from the charity organization, you’ll notice that it should outline the conditions by which the donation was made. For instance, the IRS cannot tax non-tangible benefits such as your personal satisfaction, but they can make adjustments to your allowable deduction (in the form of an audit) if you’ve received any type of gift from the charitable organization that can have a value reasonably ascribed to it. If you got as much as a calendar or a coffee mug in return, make note of it and subtract its fair value from your deductible. If possible avoid these gifts.
If the charity organization ends up selling the car within two years of receipt, even if it has been used during that time to fulfill the charitable mission, you will receive a notice of sale (Form 8282) within 30 days of the sale. That doesn’t mean you have to do anything to change the deduction you’ve already taken nor are you able to take a second deduction.
If you’re donating an automobile, boat or RV to a charity, you will not be able to claim any deduction unless you file your taxes with itemized deductions (as opposed to the standard deduction). Many people find that since they don’t have any other legitimate deductions in a given year that it actually saves them money to overlook that the donation ever happened. In fact, when the GAO investigated filings from 2000 (even before donation deductible oversight was in place) as many as 15% of donors didn’t even bother taking itemized deductions.
No matter how you determine to file your tax returns, the charity organization you choose is obliged to give to you all of the paper-work you will require to make sure you get the highest possible deduction allowed under law.
Donate a Vehicle RSS
June 10th, 2009 at 7:22 am
How can I get an RV donated to my family who is financially struggling?