As long as your local church organization is an IRS recognized non-profit organization, there is no problem making a car donation and getting a tax benefit at the same time. Chances are you have probably heard that your local church needs to raise fund for a free meals drive, or that your local priest, pastor, or deacon needs a car to preach and invite more people to attend church. If so, why not make a car donation?
The truth of the matter is, donating a used car is not as easy as they say it is. Aside from differing state regulations, the IRS has set sanctions on car donations due to rampant fraud. For example: the state of California requires a donor to fill up a liability release form, while Maryland asks for the "Maryland Notice of Security Interest Filing". One thing in common for all states though, is that they all require the Car Title as a prerequisite for contribution.
The benefit of knowing the charity closely is that paper work will be a breeze. Car donation can sometimes be taxing if you are dealing with a difficult institution. Your tax write off is dependent on the amount of speed at which a charity can process paper works because the IRS only gives 30 days from the date of donation for the tax write off to be considered. Being a member of the organization could give you a higher fair market value, because you can arrange the contribution through the church and so you will not have to pay gift taxes. More current market price means more tax deduction and more donation amount.
Furthermore the charity will have to provide all the IRS required forms like the 1040, and 5383 that is needed to process the tax deduction. If you know the charity then they will even help you in filling out all these forms and any questions you might have may easily be answered.
The inner workings of a charitable institution is not entirely that complicated. A bequeathed vehicle will either be used by a person carrying out the meals on wheels program, or it could also be auctioned off to raise funds for the food itself. In short one of these days you may see your old car parked a couple of houses down, as a charity worker delivers the meals to someone you may know.
There are a lot of fraudsters out there. There are also car donation services that get more than the charity that really needs the money. When you give your vehicle to your community church the car value is maximized. When you go through middlemen to make a car donation, much of the amount taken from the sale of the car goes into the expense of the service company and its profit. Only a pittance goes to the actual institution.
It is widely known that a car donation gets donors tax breaks. What most people don't know is that for the benefaction to qualify for a tax deduction the car donation has to be donated to an IRS qualified charitable institution. Commonly qualified organizations are those that are classified as section 501 institutions such as churches, and education oriented charities. IRS has a complete list of the years' Cumulative Charitable Organization.The amount of tax subtraction depends on the current fair price of your car, if it is less than $500. If your car is in relatively good condition, and could amount to more than $500 then, you may be able to get a deduction that is equal to the amount in which in the charity sold the vehicle. Even cars that don't run can be accepted as long as it looks quite presentable, may be repaired and then sold.Read more about business car insurance when you want to read more related articles.
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