Donations - Cash and Cars - What you need to know

During the month of December, many individuals and businesses make gifts to charity.  Often we receive phone calls regarding the gifting of old cars.  There are several rules you need to keep in mind when you are thinking about donating your old car:

  1. The charity that receives the car must be an IRS approved charitable organization that is qualified to receive deductible contributions.
  2. There is a $500 threshold for vehicular gifts but there are exceptions to this rule.
  3. The amount of your deduction is limited in most cases to the amount the charity sells the car for to raise cash. So if the charity sold your car worth $900 to a junk yard for $600 then your donation is limited to $600.
  4. If however the charity sold your $900 car for $150 then you may take up to the $500 limit as long as you can prove and document the car was at least worth $500. Just keep in mind that the amount you can deduct cannot exceed the fair market value of your donation so if the car was only worth $150 you can only deduct $150.
  5. You can use the fair market value of your car if the charity keeps your car and uses it for their organization. Again you need to document how the fair market value was determined.
  6. The charity must give you substantiation within 30 days of when you turn over your car to the charity as to the amount it was sold for. You must include a copy of the acknowledgment – IRS form 1098-C or IRS acceptable substitute form with your tax return.
  7. If the amount exceeds $500, you must complete IRS form 8283.

 

For monetary donations, you must have a bank record or a written statement from the charity in order to deduct any donation of money regardless of the amount.   The record must show the name of the charity, the date and the amount of the contribution.   Bank records include cancelled checks, bank statements or credit card statements. Donations made via payroll deductions should be documented by a pay stub. Any donation over $250 requires acknowledgment from the charity.

 

 

 


 

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