Most times, donating seems easier as it only requires one to take the product or service to the individual, institution or community that one intends to donate to. In the same case, donating a vehicle just requires the donor to either drive or tow the vehicle to the institution or individual that was to receive the donation.
However, when one decides to maximize the value of the donation for both the charity and oneself, first one has to consider getting a vehicle donation tax deduction. To receive the maximum tax deduction on the vehicle donated at the same time getting maximum satisfaction from the same, donate the vehicle to a charity that will use it for its operation rather than the one that will sell it since in the latter, the tax deduction will not be based on the fair market value but will be limited to the amount of the money the charity receives from the sale of the vehicle. It is also important that the donor checks the eligibility of the charity to receive tax deductible contributions. One can verify this through a copy of the institution’s Internal Revenue Service (IRS) letter of determination that verifies its tax exempt status. It is also important to note that the vehicle’s tax deductions may be limited to the price at which the charity sells the vehicle.
Second, one may consider driving the car to the charity instead of using a towing service. It is advisable that one also checks with the charity if it accepts direct vehicle donations without involving a third party. This allows the charity institution to keep the full amount in case they proceed to sell the vehicle. It is important to get a receipt from the charity for the donation. The most common trigger to an IRS audit is non-cash donations. Therefore, it is wise to document the value of the vehicle and keep records of it.
If the vehicle is worth more than 500 dollars, the donor has to complete section A of IRS form 8283 and then attach it to their tax return. Donors are required to file the tax return with acknowledgement from the charity. In case the charity sells the vehicle, the charity has to provide the donor with a certification that the car was sold between unrelated parties and the selling price of the vehicle within 30 days. In this case, the tax deductions for the donations will be limited to the total amount the charity sold the vehicle at. If on the other hand the charity keeps the vehicle, it must provide a receipt to the donor within 30 days. If the vehicle is worth $5000 and more, the donor also has to fill out section B of IRS form 8283. (CharityWatch, 2016)
In conclusion, it is possible to donate a vehicle to charity and obtain both maximum satisfaction as well as maximum benefit from it. If the only reason for donating the vehicle is satisfaction, one can just donate without tax deductions considerations.