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(REVIEW 1) Sell or Donate That Clunker?
What in the world are you going to do with that worthless piece of junk in your driveway? It used to be your pride and joy when it was bright, shiny, and running well. But, sadly, it's now turned into nothing more than a perch for the pigeons.
OK, it might not be quite that bad. But many of you do have an old auto or boat that you can't quite figure out what to do with. Then you hear that ad on the radio or see a notice in the newspaper that tells you about saving tax dollars by donating the vehicle to some worthy charitable organization. You decide to do it. But is that the right decision for you? Let's take a look.
Itemized deductions
A donation of this type is just another form of a charitable contribution. As such, it's another component of your itemized deductions. If you normally itemize your deductions (including medical, interest, taxes, charity, and miscellaneous items), then the charitable contribution will certainly increase your deductions and reduce your taxes.
But many people don't itemize their deductions. Don't forget that you receive a standard deduction ($9,500 for married folks, $4,750 for singles, and $7,000 for head of household status for 2003 and indexed for inflation annually). So if your itemized deductions are less than your standard deduction, claiming the standard deduction is your best tax choice. If the contribution of your old vehicle doesn't throw you above the standard deduction limitation amounts, that contribution won't reduce your taxes.
A percentage game
If you're in the 25% federal tax bracket, it means that you'll get tax relief of $25 for each $100 of contributions. So if you donate a vehicle that has a fair market value of $4,000, you could save an additional $1,000 in taxes.
Which begs the question: Why in the world would you not just sell the vehicle for $4,000 and put that money in your pocket (tax-free)?
There are several valid reasons. You might really care about the charity to which you are making the contribution. Perhaps you are busy and don't want the hassle of trying to sell the car. You might not want to dicker with an auto dealer about the value of your car as you shop for a replacement vehicle. The darn thing might just not be running, and you simply want the charity's tow truck to take it down the road.
Or... you may be inflating the value of the vehicle in order to stick it to Uncle Sam, and get your money out of the vehicle with no hassle.
NOTE - article was writtn on June 4, 2004. Consult with your accountant, as IRS Laws might have changed since.
Read more at:
http://www.fool.com/personal-finance/taxes/2004/06/04/sell-or-donate-that-clunker.aspx
(REVIEW 2) - Source: charitiesnys.com
How do I find out if a charity is a tax-exempt 501(c)(3)organization? The IRS publishes a list of tax-exempt organizations in its Publication 78, which is posted on the internet at http://www.irs.gov/charities/article/0,,id=96136,00.html
How do I know what the charity will do with my car? Some charities sell the cars they receive either at auctions or to junk yards as scrap. Others use them for their programs or give them to needy people. Before donating your car, you should ask how your car will be used and, if it will be sold, how much the charity will receive.
What should I do with my license plates when I donate my car? You should remove your license plates when donating your car. If they remain on the car, you may be responsible for parking tickets and other violations of law.
http://www.ag.ny.gov/bureaus/charities2/donating_vehicle.html
(REVIEW 3) Tips on Contributing Used Cars to Charity from BBB.org
Vehicle Donation Checklist
Verify that the recipient organization is tax exempt as a charity.
Make sure the title of the car is transferred to the charity's name and keep a copy of this record.
Find out how the charity financially benefits from the resale of the car.
For tax records, take a photo of the car and keep copies of current classified ads or guide value estimates for similar vehicles. (For more deductibility information, get a copy of IRS Publication 561, Determining the Value of Donated Property.)
If the car is worth more than $5,000, get a written professional appraisal.
Check out the charity with the Better Business Bureau serving your area.
Find out if the charity is properly registered with the government agency in your state that regulates charities (usually a division of the state’s office of the attorney general).
Read more at:
http://www.bbb.org/us/article/tips-on-contributing-used-cars-to-charity-458
(REVIEW 4) The Donating Process by the DMV
The process of donating your car to charity is simple: Call the charity and someone will come and pick up your vehicle, or tell you where to bring it. However, with so many charities to choose from and so many people trying to scam the innocent, picking the right organization is not always easy.
What to Do First
Before you hand over the keys to your car to a charity, the IRS advises that you:
Research the charity.
See if you will receive a tax benefit for your donation.
Look up the value of your car (however, you can only deduct the actual amount the charity sells your car for).
Ask if you, as a donor, have any other responsibilities.
In addition, you may want to consider:
How will your car be used?
Will the money from the sale of your car be used locally or outside of your community?
Which programs or services within the charity will receive funding from the sale?
What is the efficiency rating of the charity? (A lower rating means more of your donation goes toward administrative costs, not to the programs and services you want to support.)
For more information on this and tax-related matters, read the IRS's A Donor's Guide to Vehicle Donations.
Finding a Charity
Forbes ranks America's 200 Largest Charities and, in some cases, discloses their financial details, which may help you make informed giving decisions. Be sure to visit the Better Business Bureau (BBB) in your area, if you are interested in local charities. Or the BBB Wise Giving Alliance.
Notice of Transfer
Be sure to visit our guide to Title Transfers to learn how to transfer the title over.
Tax Write-Off
The IRS has clamped down on how much you can write off on donated cars. No longer can you submit a vehicle's full value. Now, instead, you can only claim the amount for which it is sold. For example, if your vehicle has a Blue Book value of $1,600, but the charity only sells it for $725, you must submit the lower deduction.
Your charity must give you a deduction amount within 30 days of handing your car over, or, if it applies, within 30 days of it being sold. If you're not notified within this time span, call your charity. The amount will come in the form of a mailed letter. Use this as your receipt, or what the IRS calls your acknowledgment.
If the deduction exceeds the IRS's normal $500 limit, your acknowledgment must contain the following information:
Your name and taxpayer identification number.
The vehicle identification number.
The date of the contribution.
And one of the following:
A charity statement verifying that no goods or services were provided in return for your car donation.
A description and estimate of the value of goods or services, if any, exchanged for your donation.
A statement that goods and services provided by the charity consisted entirely of intangible religious benefits (if applicable).
Where to Donate
The choice is yours. But before donating, confirm that your charity of choice is recognized by the IRS. Otherwise, your deduction will be rejected. If in doubt, check the IRS's Publication 78. It lists qualified charities; religious organizations aren't listed, though they do qualify. Or, either contact the Better Business Bureau (BBB) in your area or the BBB Wise Giving Alliance.
If you're still undecided, Forbes ranks America's 200 Largest Charities and, in some cases, discloses their financial details. Keep in mind, however, that not every charity listed here accepts car donations.
How to Cancel Plates and Tags
The laws for this vary by state. Some states require surrendering the vehicle's license plates to the DMV. Others require submitting a sold notice. And there are a few states that require no formal notification at all.
Check with your DMV for requirements.
Read more at:
http://www.dmv.org/buy-sell/selling-your-car/donate-car.php
(REVIEW 5) How to donate a car or boat to charity by MSNBC
It sounds so simple: Donate your used vehicle or boat to charity, avoid the hassles associated with selling it, and score a tax deduction at the same time. Everybody wins, right?
Before you hand one of your biggest assets over to anyone, read the following tips to be sure you’re 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. Here’s the catch: These organizations typically keep about 50 percent to 90 percent of the vehicle’s value for themselves, and the charities don’t 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 aren’t 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 you’re busy – at least ask the organization how much of the car or boat’s 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 Service’s 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 you’ll be directed to the right publication.)
5. Do the delivery yourself. Once you’ve 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 you’ve said goodbye to your donated vehicle? Then formally re-title the vehicle to the charity, and report the transfer to your state’s department of motor vehicles or licensing. Never agree to leave the ownership space on the charity donation papers blank.
7. Your estimate of the donation’s value probably won’t 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.) You’ll 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 won’t 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, you’ll have to attach IRS Form 8283 to your tax return. If it’s worth more than $5,000, your documentation must include an outside appraisal. You’ll 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 i’s, you can make sure that the charity gets the most benefit and you get the biggest possible deduction.
Read more at:
http://today.msnbc.msn.com/id/26625209/ns/today-money/
(REVIEW 6) Guide To Donating Your Car by Charity Navigator
As America's car donation system is currently construed, it is easy for donors to benefit greatly by donating their cars, albeit with a little risk. By following these 10 Charity Navigator Tips For Charitable Auto Donations, you can minimize that risk, and maximize the amount that actually gets to charity.
1. Find a Charity That Directly Accepts Car Donations
If at all possible, avoid the for-profit intermediary organizations that advertise so pervasively to handle your car donations. When you work with one of these organizations, they keep the vast majority of the dollars created from your donation. Even the most reputable of the agencies that handle these transactions keep nearly 50% of the car's value for their troubles (other, less scrupulous entities keep 90%, or even more). If you can find a charity that handles the transaction themselves, they can keep 100% of their profits. It's possible that the charities you already support have a car-donation program that you don't know about. Check with them first.
2. If Your Charity Doesn't Accept Cars, Take the Time to Find a Charity That Does, and Still Does Work You Respect
Remember that you're still making a charitable donation, and don't simply give your automobile away to any charity, just because they're a charity. Do a little research, and find a high-performing charity that does the kind of work you like, in the region you wish to target, and does that work well.
3. If It Runs, Drive the Car to the Charity
Worthy charities are going to have to pay someone else to handle a pick-up or a tow. This is yet another cost that cuts into the amount that gets to that organization's programs. If you can get the car to them yourself, do it.
4. If You Have to Use a Intermediary Agency, Research the Percentage that Gets to Charity
The IRS does not require the car donation agencies to contribute a set amount of the auto's proceeds to the intended charities; that amount is negotiated between the charities and the handlers. Try to find an agency that maximizes that amount, and call the charity to confirm that number before you give. The charities are reluctant to criticize the middlemen, because they don't want to lose the dollars they do receive, but state attorney generals are beginning to investigate and even prosecute these for-profit middlemen, for holding themselves out as charities and misleading the public on the amount that is actually reaching charitable causes.
5. Make Sure Your Intended Organization is a 501 (c) (3)
While many organizations can claim non-profit status, donations to 501 (c) (4) organizations are generally not tax-deductible. These are political organizations with permission to lobby our government; like Disabled American Veterans or the National Rifle Association. Make sure your intended recipient has 501 (c) (3) public charity status.
6. Transfer the Car Correctly to the Charity
Some charities will ask you to leave the assignment of ownership space on the charity donation papers blank, so they don't have to re-title the auto. If your charity asks this of you, find another charity. If you don't formally sign your car over to the designated nonprofit, you will be held responsible for any parking tickets that are subsequently incurred, or liable if it's used in a crime. Remember, the charity you give the car to will probably not use your car to deliver meals to the needy, but will simply sell it as quickly as possible. When someone buys it from them at auction and doesn't bother to register that car, it's still yours in the eyes of the law.
7. Value Your Car Correctly
Due to the proliferation of car donations, the IRS became increasingly concerned about how taxpayers valued the vehicles they donated to charity. Over the last few years, the agency stepped up their audits in this area and began to advocate for changes to the laws that govern such deductions. With the passage of the American Jobs Creation Act of 2004, those changes have come. Starting with your 2005 tax return, you will no longer be able to deduct the published fair market value of vehicles worth more than $500. Under the new rules, your deduction will be determined once your car is sold and the charity sends you a receipt indicating the exact amount your car garnered at auction.
8. Complete Your Paperwork
If your car is worth more than $500, you must complete IRS Form 8283 and attach it to your yearly taxes.
9. Use Fair Market Value (FMV) for the Car
There are several exceptions which allow you to use the Kelley Blue Book or a NADA guide, but you must use the FMV, not simply the highest value listed for the year and make of your car. Use the FMV when:
instead of selling the vehicle, the charity keeps and uses it,
the charity makes improvements to the car before selling it,
your car is sold at a discounted price to a person with a low income,
or if the car is worth less than $500.
And remember to always get a receipt when you donate the car. Again, the IRS is watching this area very closely.
10. Take the Time to Get It Right
It is true that the biggest winner in the car donation game is usually the donor, and not the charity recipient. But if you take your time, ignore the quick and easy television appeals, and find a reputable, high-performing charity that will make the most of your donation, we can all emerge victorious.
Read more at:
http://www.charitynavigator.org/index.cfm?bay=content.view&cpid=158
(REVIEW 7) - Instructions by EHOW:
1
Find a charity that accepts cars without charging a large removal fee. Make sure the organization is a registered 501(c)(3) charity or qualified religious organization that can lawfully accept your donation and from which you can lawfully claim a deduction.
2
Determine the fair market value of your car. According to the IRS, you are responsible for determining this; use the Kelley Blue Book or IRS Publications 526 ("Charitable Deductions") and 561 ("Determining the Value of Donated Property"). If it's worth $5,000 or more, have the car appraised by a certified professional.
3
Get a tax receipt with the charity's name and federal tax ID number, donor's name, date of donation, as well as the year, make and model of the donated car.
4
Notify the DMV and your insurance company that you no longer own or insure the vehicle. Follow state regulations on what to do with the title and plates. Keep your receipt and completed IRS Form 8283 for tax time.
Read more at:
http://www.ehow.com/how_107456_donate-car.html#ixzz1ICFWdUhJ
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