Steps in Donating A Car
Donating Your Car for Tax Consideration
Step 1: Assess the value of your car. What is the fair market value?
Step 2: Determine if your car is in acceptable condition for a donation. If your car is worth more than $5,000, perhaps it should be appraised by a professional and then keep the appraisal for tax purposes.
Step 3: Deal with a charity that appeals to you. Make-A-Difference Foundation (MAD)
Step 4: To take a tax deduction, confirm MAD is a registered 501(c)(3) organization.
Step 5: Check with your state regarding what to do with the car title at the time of donation.
Step 6: Give the car keys to MAD when you turn over the car.
Step 7: Get a complete receipt from MAD. The receipt should include our name, our federal tax ID number, your full name and the date you donated the car. The car's year, make, model and color should also be included on the receipt. If you wish, incorporate the car's mileage and condition too.
Step 8: Contact your insurance company and cancel the insurance on the car.
Step 9: Keep all documentation of your car donation. You will need to submit the documentation when filing your taxes.
By law, allowable deductions for charitable contributions of vehicles, boats and airplanes (collectively referred to as “assets”) for which the claimed value exceeds $500 will depend how the asset is used by us. If we sell the asset without any significant intervening use or material improvement, the donor’s deduction is limited to the gross sales proceeds received by us. But, if we use the asset in direct furtherance of our charitable purpose the donor may deduct the “fair market value” of the asset. (According to the IRS, the donor, not us, must determine the “fair market value” which the IRS describes as the price that a willing buyer and willing seller would agree upon if neither were pressured to do so.
Make-A-Difference Foundation would use the car and make significant use of the asset, making improvements, using it for business use and as an asset in direct furtherance of charitable purpose.
