When the US General Accounting Office (GAO) issued its landmark report on charitable vehicle donation to the Senate Committee on Finance in November of 2003, over 4,000 distinct charity and non-profit organizations (NPOs) were accepting vehicular donations.  Though most of these used third-party, for-profit facilitating agents at the time, changes in tax laws for the 2005 tax season ushered in a new self-sufficiency among a smaller class of NPOs, often more closely geared towards benefiting from charitable vehicle donations.

Consider the very large field that benefited in varying degrees from the glory days of charitable vehicle donation, before government regulation stepped in and made it harder for people to take unreasonable deductions that varied greatly from the actual amount that charitable organizations actually received.  Though a large part of this had to do with some vaugery in how the law was written, it was also a consequence of a large segment of often less-than-scrupulous third-party agents who acted, supposedly, on behalf of the charities in question.

Now that one can only deduct the amount their charitable vehicle donation actually nets the IRS-approved charity, many of these third party players have left the game seeking easier marks elsewhere.  This means that many charities that relied on charitable vehicle donation for more than a small percentage of their annual budget were forced to either handle their own donations or make much stricter agreements with the companies that retrieved the vehicles for them.

As such, many of the charities that once accepted charitable vehicle donations were interested only in the money they were able to get from sales.  These include many of the more commonly known and nationally represented charities such as Easter Seals, and the Lung Association.  Indeed, medical related funds are very common types of charities that accept monies from donated cars rather than the cars themselves.

Some NPOs that accept charitable vehicle donation do so in an effort to further aspects of their social mission that include donating repaired vehicles to needy residents or using them to create a fleet of vehicles to shuttle old folks to their doctor appointments.  Sometimes the receipt of a charitable vehicle donation is tied to taking classes learning how to fix and maintain such a car, should anything go wrong (which it undoubtedly go haywire in the span of a few years given the used nature of your donation). 

Like Habitat for Humanity, some charitable vehicle donation projects make part of the charitable process dependent upon the recipients and other members of the community working together to actually make the donation something useful.  Such charities with an educational and uplift mission don’t have to be schools, though other types of education are usually involved.  In this case, your charitable vehicle donation has the best chance of actually becoming a running and useful gift.

Another type of charity that can use your charitable vehicle donation doesn’t have the facilities to fix vehicles, but may have a need for a donated vehicle.  For instance, some schools have use for a vehicle temporarily, such as when the sports teams are travelling, but as soon as they’re back for the year, the car may be sold to the highest bidder.  This can include colleges and adult education, too.

One surprisingly eager recipient of charitable vehicle donation are the local police and fire department.  This is one area where a boat may actually be likely to be used for professional purposes, such as in the case of search and rescue missions.  Most police and fire departments are always on the lookout for a car that runs well enough to be used right away.

The ideal charity is one that can use your charitable vehicle donation directly rather than selling it as quickly as possible at auction.  In the case of educational missions, a car with few dents and mechanical problems can prove invaluable to those in need, even if your charitable vehicle donation is in pretty rough shape when received. 

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Prior to 2005, the ultimate use of a charitable organization’s car donation program had very little to do with how much you could expect to receive as a tax deduction. In fact, many for-profit organizations used the lure of deep (and often totally out of line) deductions to lure donors into supporting a charitable organization.

Car donation proved very lucrative as a type of revenue for many third-party agencies that facilitated vehicular donations for various charitable organizations. Car donation today still represents a good deal for both the charity or non-profit organization (NPO). By dealing directly with charities that have an actual use for what you’re offering in the form of actual transportation.

On the other hand, many charitable organizations for car donation that specialize in such gifts, have traditionally used wholesale sales yards and demolition services to get rid of cars as quickly as possible. This is especially true of automobiles that require some work to get them in top running (and selling) condition. In this case, you are only able to claim the sale amount, no matter how low, as your itemized deduction.

Just like a house, the more work you put into upkeep, the higher the inherent value when it comes time to sell. You not only get to enjoy the benefits of the work as well as the often time surprisingly high sale value that even a small improvement job can guarantee. It is the same when giving to a charitable organization. Car donations, when properly repaired and cared for, can give an auto a new lease on life that may last for years.

Of course, as far as the needy populations of a community are concerned in this day and age, the better mileage the car gets, the more likely it is to be useful to those who need donated cars to commute to work from a fair distance. Those who are needing transport for children over relatively short distances will appreciate vehicles with extra room.

If you want to find out what sort of vehicles are in demand in your community, there’s no substitute for directly contacting the charitable organization in question. Car donations of running automobiles, suited to your local population, are the most likely to be used rather than sold for the cash.

Even cars that are fixed up to be sold may wind up being sold at auctions that undermine the sale value of your car. While you can make a case for why you should be granted extra deduction monies that more closely reflect the fair market value of the vehicle, it may behoove you to take the lower deduction amount to avoid an unpleasant audit that could result in loosing your deduction entirely. Sometimes it’s best to err on the side of caution.

Of course, your tax preparation professional will be able to advise you regarding such finer points of tax strategy. Generally speaking, however, cars that are repaired for auction are sold to the highest rather than lowest bidder. You have every right to inquire after he proposed use of any car you plan on giving to a charitable organization. Car donation is now so dependent upon the ultimate use of that car, that even if you don’t care how the charity in question uses your gift, you have to appreciate the benefit of how a efficient use of an old car can result in the highest possible deduction benefit to you as a donor.

You may want to seriously consider narrowing your search to locally run charitable organizations. Car donation to such charities and NPOs that have a mission involving automobiles has a better tendency to deliver the maximum possible deduction allowed under law.

Often this means that your car not be too far gone or require very expensive parts to make it run reliably or have any major conditions that prevent it from being registered in your state. However, if your automobile meets the criteria of your local charitable organization, car donation may be an excellent option, no matter what tax bracket you occupy.

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Perhaps the most personally rewarding sort of car donations involves giving your old ride to the local high school for use in their shop class.  High schools are considered valid charitable organizations according to the IRS, as are colleges and adult training programs that fulfill a charitable mission. 

Since the tax laws regarding car donations were changed in 2005 to stem the tide of fraudulent deductions that were uncovered by several independent reporters and the US General Accounting Office in 2002-3, choosing to make car donations to charities that will fix up the car and put it to good use will help you get the full fair market value for your car in the form of a legal deduction. 

Most high schools have a shop program, just as most schools have a budget shortfall these days.  Just after music and arts programs, the mechanical arts programs are very often among those programs on the chopping block when budget time rolls around.  A healthy stream of car donations to such programs not only emphasizes the need for such training, but can also become a valuable revenue source for the schools in question, making shop classes that much more difficult to cut or limit.

Moreover, the proceeds from the sale of newly renovated car donations can benefit other programs such as arts and music.  Even if the purpose of such proceeds are turned right back into trips to the Corvette Hall of Fame for shop class students, a valuable message is sent to those students that their services will be required upon graduation, so perhaps they ought to pay attention.

Indeed, there’s nothing quite like seeing your old jalopy being used to haul a float in the homecoming parade.  You can watch it drive by with the satisfaction that money from your car donations is staying in the local community and going to benefit people whose training your town will rely upon for years to come.

Of course, there are limits to just how junky the automobiles used for car donations can be while remaining useful training.  Particularly if there are very expensive parts that need to be ordered and can’t simply be repaired.  In this case, the school might find itself spending more on parts than the car is likely to get when it’s eventually sold.

It is this sale price that drives the ultimate financial value of car donations as far as the donor is concerned.  One of the most important aspects of such ar donations is the amount of deduction that can be claimed.  Though you should get a receipt of transfer as soon as a vehicle is donated to the school, the ultimate value will be determined by the final sale price of the vehicle. 

This represents your fair market value of the donated car and is often quite a bit higher than if you tried to sell the car yourself without making repairs or if a charitable organization simply sold the vehicle on the open, wholesale market.  Even if the car is eventually given away or used to transport the girl’s softball team to away games, such car donations may still be deducted at the fair market value according to publications such as the Kelly Blue Book.

There may be other restrictions.  For instance, some high schools stipulate that only car donatations of US manufacture are suitable for their students to work on.  This isn’t necessarily a type of bias – they may simply not have metric standardized tools to do the work on foreign autos.  If you do have the proper tools to work on your oddball car, you might want to consider throwing those in with any such car donations, to sweeten the deal.

Especially in demand are older or classic cars that have plenty of room and require body work.  Vehicles that allow for a mechanical tune up without special diagnostic equipment are also highly prized car donations.  Taking all these variables into consideration, your old vehicle might be the very thing for your local high school to refurbish into the lean, mean, driving machine you fell in love with in the first place.  Having a plaque on the wall with your name on it isn’t a bad incentive either.

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While a bevy of advertisements encouraging car donation to charity would lead one to believe that such donations are a major force behind fundraising for legitimate charities and non-profit organizations (NPOs), most charities are far more reliant upon more traditional methods of giving.  Non-cash donations continue to be dominated by donations of household goods to thrift stores and stock donations than vehicle donations.

When contemplating a car donation to charity, one should consider just how the charity or NPO in question could actually use the donation of a vehicle.  Just as there are now restrictions of usefulness on what one can claim from household object donations, a car that runs (or can at least be repaired without major capital investment) is far more valuable to a charity that can actually use the car directly to further their charitable mission.

Consider a charity that employs a third party, for-profit organization to facilitiate all car donations to charity.  After their cut is taken, there is sometimes very little left over to actually be donated to the charity in question.  Moreover, if you give a car that is only fit for scrap, the invoice statement you’ll be given as a guide to your actual deduction benefit will reflect this. 

Usually the value is far higher for a running car in terms of total money produced by the sale of your car as well the percentage of that the charity is able to keep from said sale.  This means more money to reduce your net taxable income, too.  Cosmetic damages are usually unimportant to a NPO or charity that is primarily concerned with the functionality of non-cash automotive donations.

Because many of the third-party agents that handle car donations to charity have turned their attentions elsewhere since 2005, there are many NPOs that formerly took auto donations but are no longer accepting them because of all the bother associated with running such a program themselves. 

Sometimes, this is simply because the agency lacks a tow truck of its own to pick up cars.  Whether they’re running or not, vehicles are almost always towed away to avoid liability issues.  As such, this type of car donation to charity, even if the tow truck in question is not in the best shape ever, can be incredibly useful as well as being a high-ticket item for deduction purposes.  Not only will you be able to claim a highly useful fair market value deduction, but you’ll also help the charity or NPO collect a lot more money and automobiles in useful car donations that they may have otherwise had to pass on.

Of course, another way to maximize your donation dollars is to make sure you have a free and clear title that can be easily transferred without making staff members of the non-profit jump through proverbial flaming hoops at the department of motor vehicle office.  Often people remove the existing license plates and leave the title inside the glove-box for the towing company to find.  This allows you to make sure that you’re not held liable for any of the traffic violations a teenage Meals on Wheels volunteer may commit with your former car.  Donations to charity don’t need to put you in a vulnerable position!

Overall, the reliance of most NPOs on car donations to charity has remained somewhat low.  This is true of most charitable organizations with the exception of those that specialize in giving cars away to needy folks who require reliable transportation.  Even if they sell them at a discounted rate, such charities are especially valuable to donors as well as the populations they serve.

If your car is still running, even if it has become ugly, is of great use to many of the organizations that still accept car donations to charity.  Choose wisely to make sure your car is put to the best possible use.  If your car is fit for little else than scrap, donating it to a charity that requires running vehicles may not be much of a useful donation at all.

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 Protecting Yourself From the Alarming Rise in Fraudulent Car Donation Programs

According to the General Accounting Office’s (GAO) 2003 report to the Senate Committee on Finance, the incidence of mis-reporting from car donation programs was out of control.  In 2005, some changes were made to the rules that govern car donations and the subsequent deductions that are allowed. 

However, the report also showed that an alarming 95% of third-party agents that facilitated the donations for perfectly legitimate charities and non-profit organizations (NPOs) were for-profit organizations that ate up as much as 70% (and sometimes even more) of the profits from the sale of donated automobiles.  This means that a very paltry amount of the proceeds from such sales were actually reaching the charities.

Since the 2005 changes took effect, the previously very lucrative business of selling donated cars for IRS authorized charities that didn’t have in-house resources for dealing with automotive donations, has become somewhat less profitable.  As such, the proportion of third-party car donation programs that operate for profit has declined.

That doesn’t mean you don’t have to be diligent about the type of car donation programs you look into when deciding to donate a used car to charity.  There are still several states (many of them in the Western United States) that don’t require such car donation programs to register with the state Attorney General’s office.  If you live in one of these states, you’ll have to be very careful about the ultimate use of your car, since the amount you’ll be able to legally deduct without attracting the attention of auditors is tied its use.

For starters, you should check all car donation programs to see that they are actually representing charities and non-profits that are sanctioned as charitable organizations by the IRS.  If in doubt, ask someone at the charity in question how their relationship with the third-party agent works.  If they are not in control of the program, there could be room for citing exorbitant overhead costs, despite increased regulation of such overhead costs since 2005.

Car donation programs should be able to give you a good idea of how the donated car will ultimately be used.  Your benefit in the form of allowed deductions will be higher if the car is to be used by the charity itself (such as is the case with Meals on Wheels) or given to a needy family that needs reliable transportation.  If this involves fixing the car up before being given away, the value of the repaired car may be deducted. 

It also behooves a donor to inquire as to how the vehicle will be rehabilitated.  Car donation programs that are known for performing such repairs as part of an educational mission will make it especially easy for you to claim the fair market value of the car, even if it is eventually sold to someone (such as one of those needy families) at a deeply discounted rate.

If one of the car donation programs you’ve chosen doesn’t seem to be forthcoming with answers to your questions, check with the state Attorney General or other organization that is responsible for monitoring such agents.  Even in a state without such oversight, some private organizations, such as the Better Business Bureau, have their own lists of reputable car donation programs that may be better able to serve your charitable desires.  Indeed, this might be the best place to begin your search.

It is also useful to note that all car donation programs are required to give you a receipt within 30 days of picking up your car, though the receipt of sale is what you will actually use to value your donated automobile for deduction purposes.  If the charity in question will be spending some time fixing the car up or using it for their own charitable purposes, you should still expect some paperwork to that effect.  If you don’t get it within a month of your car donation, you should call to check up on the status of your receipt.

It has become far easier to check on the charitable mission of car donation programs in recent years.  A little bit of homework on your part will help you avoid unscrupulous car donation programs that have little, if anything, to do with the charities they claim to represent.  Check twice and donate once.

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Not everyone has the time to deal with all the intricacies of preparing their car for sale, much less fixing up an old clunker to maximize their sale value.  This has historically been the job of a car donation program that is either run by a charity or non-profit organization (NPO). 

Sometimes, NPOs use a for-profit third party to facilitate the possession and sale of truck and car donations.  Such unscrupulous programs that take advantage of the charities they are advertised to serve have been a less common though persistent problem since modifications were made to the tax code in 2005.  However, by carefully checking the details of any car donation program you decide to use, you can guarantee the majority of the proceeds from the sale or donation of your car goes right to the charity you choose instead of middle-men.

Indeed, though they once represented only about 4% of third-party donation agents that manage car donation programs, some are actually non-profit themselves.  You can check on this to make sure by asking for the organizations tax ID number and looking it up on the IRS website. 

Using such a car donation program has the advantage of best utilizing the talents of those working for the charity you hope to donate to.  Especially now that the actual amount of your deduction is tied to the ultimate use of the automotive donation, it is in the interest of many such organizations to get the most practical use from your donation as possible.

And let’s be honest, most of the cars given to a car donation program are not in the best of shape, otherwise you’d not be getting rid of the car in the first place.  When the car isn’t even running well, the offer of a free tow from your location can be a good motivator.  However, in such cases, you might want to shop around to see if there’s a car donation program in your area that specializes in teaching people how to fix up old cars rather than just sell them to the nearest available scrap yard.

Sometimes, donated cars run perfectly well, though you’ve decided to upgrade.  This is common enough that many charities are constantly on the lookout for such car donations.  Programs that focus on road-worthy cars are often the very same ones that will find a practical use for your donated vehicle that will allow you to take the fair market value of the car for a deduction rather than a somewhat lower (often much lower) sale price that is paid for cars auctioned at wholesale.

Just because you don’t have time to deal with making the sale of the vehicle yourself doesn’t mean that you don’t want to make sure the charity you choose doesn’t get the highest possible benefit from your donation.  As such, you should never be afraid to ask a car donation program to tell you how they plan to use your vehicle.  If you don’t like what they have to say, go ahead and keep looking.  There are still plenty of charities (and their agents) that are legitimately hoping to maximize your value as well as their own.

One exception to the usual benefit of car donation programs is a vehicle that has actually appreciated in value over time.  Though this is not usually the case, some classic cars are subject to such appreciation.  If you’ve had the vehicle for more than one year and it has appreciated during that time, you may be subject to capital gains tax from the sale. 

It is best to consult with an accountant to deterimine if the donation of such a car, whether you conduct the sale yourself and dontae cash or allow a car donation program to handle it is the best option for you.  Generally, donating the car itself is the best course of action, though again, its use has an impact on the amount you’ll be able to deduct from your taxes.

Car donation programs can take a lot of hassle out of your charitable donation of a vehicle.  By following some simple guidelines for choosing the best car donation program for your needs, you can maximize the benefit of your gift all around.

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Most people assume that car donation and charity giving are tools the rich alone are able to use to ease their tax burden.  This couldn’t be further from the truth!  Anyone can file a tax return with itemized deductions if they bother taking the time and effort to do so.  Though you are responsible for gathering receipts that back up your deduction claims, car donation for charity is now set up in such a way to make claiming the correct amount in deduction easier than ever.

In the case of car donation, charity organizations have been reliant upon donated items for a long time, though hardly as a large part of their overall donation dollars.  In fact, a report issued by the General Accounting Office (GAO) in 2003, when levels of charitable giving was at its highest in terms of car donation, charity coffers were still little affected by the input of donated vehicles.  As little as six percent of the “typical” charity was represented by car donation.

The self-employed are in an especially good position to take itemized deductions of monies turned back into the business as well as legitimate car donations.  A charity that is sanctioned by the IRS and has a legitimate non-profit tax ID number should be more than able to provide you with the forms you need to make your deduction with the same confidence as any other type of deduction you save a receipt for.

Of course, individual returns are far more likely to claim the standardized deduction, making car donation to charity impossible to claim.  However, filing itemized deductions can actually benefit most taxpayers providing they take the extra time to write them all down.  Indeed, it is common for someone who had previously taken a standardized deduction to find their tax burden to be somewhat to significantly decreased as a result of this extra effort – as much as 30 or 40% in some cases.

With the extra money available for donation that can come from car donation, charity giving can be very useful for bringing one’s income down below the level where they might put you into a higher tax bracket.  Near the end of the year there is often an increase in auto donation by those who are nearing a higher bracket they wish to avoid.  This can save you quite a bit when done correctly. 

Generally it is a good idea to not count on your car netting the sort of value at sale that you might imagine it would, given the Kelly Blue Book value listed.  According to current IRS guidelines, car donation to charity that nets over $250 must be accompanied by a receipt that clearly outlines how much value the car actually was able to get (usually when sold on the wholesale or scrap markets) for the charitable organization in question.

Another potentially lucrative use of car donation to charity is using the donation amount as a deduction compared with the expense of fixing up the car yourself for sale later.  Though this can actually save some people more money, one is liable for the capital gains of a vehicle that has appreciated since you took ownership at least one year previously.  In the case of collectible cars that have already been fixed up, this can represent a real hit.  Knowing what cars to donate and which ones to keep a hold of for investment purposes is highly volatile and subject to the other income specifics of such a donor. 

It is always a good idea to talk to a CPA, especially if you already have the services of one retained for your regular tax preparation advice.  If you own a business, this is especially true.  Even the same car donation to charity can vary greatly in its value to an individual’s return.

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Though many people consider the Internal Revenue Service (IRS) to be their own personal nemesis, given the ever-increasing cut of income that’s taken every year, the are some car donation charities FAQs it is to everyone’s benefit you should be aware of, as a taxpayer.  To that end, the IRS has gone to great length to make their policies easily available in many different ways, some of which are generally more effective than others.

Regardless of how one gets their information about car donation, charities FAQs have been a matter of public discussion ever since the somewhat shady nature of vehicle donation was made apparent in the early ‘aughts.  When the General Accounting Office (GAO) issued their groundbreaking report to the US Senate in late 2003 (as a result of public outcry and pressure from states), not even the IRS or Congressional Finance Committees seemed to know the rules and regulations regarding car donation charities. 

FAQs have since been adjusted according to the new rules that made it far harder when for-profit companies tried to use legitimate charitable operations to line their own pockets.  Now that many of these loopholes have been addressed, your odds of making a charitable automobile donation that you can feel good about are better than ever.

Among the most often asked car donation charities FAQs is how one goes about selecting a good, worthwhile charity.  They may contact such a charity immediately, or look up an auto donation service that serves charities they support.  The IRS would generally prefer you donate directly to keep potentially obfuscating the amounts actually going to the charities in question.

Of course, the IRS would also like to file the correct paperwork, since even a friendlier IRS still has a slavish devotion to filling out standardized forms.  In the case of auto donations greater than $500, a donor is required to file a Form 8283, section A.  This can be downloaded from the IRS website and should be signed by both the donor and the charity in question.  Many charities will happily supply you with such a form – it is in your best interest to find out if this will be taken care of for you before you sit down to do your taxes at the end of the year. 

Another important car donation charities FAQ is that if the donation is worth more than $5,000 (whether the vehicle is to used by the charity or sold), section B of Form 8283 must be filled out and attached to your deductions form.  Additionally, you will also need to supply an independent appraisal with your return for such high-end donations.  This can be arranged by the charity or yourself.  The cost of such an appraisal may or may not be considered part of the donation – check with your CPA to make sure what the current regulations are given your exact circumstances.

When dealing with car donation and charities, FAQs pertaining to how you will go about itemizing your deductions govern how such a donation will actually benefit you and the charity in question.  For instance, it is wise to consider the extra effort (or money in the case of paying a professional tax preparer) is involved in switching to itemized deductions.  Some people are actually better served buy taking the standardized deduction.  You should balance these potential expenses against the actual amount your tax burden will actually be decreased.  In most tax brackets, this represents about a third of the value of your car donation.  Charities and FAQs pertaining to car donation should clearly point out that deductions are from one’s net income rather than the amount of tax owed.

When considering the actual tax benefit of your car donation, charities FAQ usually do a good job of pointing out the limitations of the value you can claim as a deduction, as well as their own status as an IRS sanctioned non-profit organization.  In the case of charities that have a limited or dubious mission, you could find your deduction challenged as going to a less-than-charitable organization.  Do your own homework and verify the validity of any charity you choose to donate to.

And remember, all the car donation charities FAQs in the world won’t protect you if you take an active role in defrauding the federal government.  Honesty is the best policy in all dealings with the IRS.

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It could be said that the new regulations regarding car donation, going into effect during the 2005 tax season, actually make it easier to avoid audit, since there is far less wiggle room to maneuver within.   However, to actually take a legal deduction from your taxes, there will need to be some forms filed and receipts gathered.

The extent to which you are required to prove the worth of your charitable donation, given to a IRS approved 501 (c)(3) non-profit organization (NPO), is determined by the likely value of the gift.  That said, one doesn’t always know what the sale of their car will fetch in the marketplace, regardless of what some chart may tell you.  The actual price your car donation fetches will be your deductible value, and this can actually be rather low when sold on the wholesale market, especially by a third-party agency that facilitates car donation for NPOs that lack the facilities or manpower to handle such donations themselves.

Begun several decades ago by the Goodwill Corporation to train their employees and recycle unwanted vehicles, car donation programs were designed to be offered by NPOs alone to serve a direct and needy market.  In the 1990s, a tremendous upsurge in for-profit organizations that spent a great deal of money on advertisements created a rapidly expanding trend of even lower-middle class individuals using car donation to reap the charitable tax deductions offered by the receiving agents.

When assessing your car donation, one must really consider what it is worth on the market, both if you sell it yourself and if you use another agency to sell it on the wholesale market for you.  One can assume anywhere from 20-60% of the value of the retail market in such sales.  Since a great many NPOs still use third-party (over 95% being for-profit organizations according to a scathing 2002 investigative article) intermediaries to manage the pickups, title-transfers and sales, you should give some hard consideration to how you want to handle your own car donation.

Many people choose to fix up and sell their own vehicles, preferring to pay tax on that “income” and give the remainder to the charity of their choice.   Everyone, after all, takes cash.  This way you also act as your own “middle man,” giving your time as well as the donated value of your car.  You could even sell that car for scrap, have it hauled away, and give the proceeds to the charity, cutting out that sometimes very expensive middle step of involving a car donation facilitator.

Regardless of how you go about it, a non-cash gift to a charity is likely to fetch less than $250, you don’t need any sort of receipt from the NPO – the IRS will, in this case, take you at your word.  All you need to supply is the name of the charitable organization that received your car donation, the date of the car donation, the place the donation took place,

However, if the value of your car donation is $250 or greater, you’ll need to get a receipt from the charity that is officially registered as an NPO or charity by the IRS.  If you want to check up on a given charity’s status, they should be able to provide you with a non-profit tax ID number that you can then check against the IRS database.  This receipt should be dated and indicate what use the vehicle was to be put to, even if it is just for sale. 

Car donations destined for immediate sale are typically not valued for tax purposes until the sale has been made.  Instead, one will receive a temporary receipt that indicates a transfer of title and a forthcoming receipt to be used for determining your deduction. 

This is most often true of vehicles worth over $500.  Such vehicles must be accompanied by Form 8283 (section A only) that the authorized charity issues along with their own receipt of car donation monies.  In a perfect world, those separate car donation and charitable income figures will match up with each other as well as the amounts people are deducting from their personal or family income taxes, as they assuredly didn’t before 2005.

Sale values over $5,000 must also be accompanied by an appraisal from an independent agent that can verify the fair market value of any car donation.  Now that one must present proof of how much their car donation earned at auction, there is little reason to make any kind of error when valuing your car donation for deductible purposes.

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With the sweeping legislation that caused a steep decline in the amount of money represented by auto donation, boat donation has also suffered a similar loss due to the plugging of a loop hole that was benefiting everyone except the federal government and the charities themselves.  However, there are still perfectly legitimate and far more efficient ways to use boat donation to benefit your favorite charity if that is your motivation.

In the past, one could donate a boat, RV, motorcycle, trailer or just about any type of vehicle or appreciated object to a third-party agent that would handle the title transfer and sale.  Such boat donations were almost always destined for the wholesale market, as it was faster and cheaper to get a small profit as it was all profit for the third-party agent since very little paperwork or oversight was required in such a low-end market.

By 2005, the rules that had been allowing for-profit organizations to charge exorbitant fees for their services, filing only the most minimal of paperwork and claiming as much as 80% of the wholesale value in fees to the charity, changed.  As if by magic, those for-profit companies that legitimate charities had relied upon started pulling out of this now less lucrative market that was now asking for itemized statements of expenses and far stricter bookkeeping.

There have always existed non-profit organizations (NPOs) that took a more efficient approach to boat donation and handled the sale of watercraft to private parties themselves.  Under current tax laws, this means that boat donations in excess of $500 are valued at the amount they’re sold for.  As such, the deduction from your boat donation depends heavily upon how much effort is put into the sale.  Charities that have always practiced their own high value sales have been well-positioned to take advantage of the cars still being donated.

Often, however, the boats offered up for sale from the boat donation market are not in particularly good shpae.  This was how even perfectly legitimate uses of boat donation were actually cheating the IRS (and eventually many of the programs and services that rely upon federal funding) out of millions every year.  When even a “poor” value was taken from an appraisal book or website, this value wasn’t’ a good representation of most boat donations.  Even a boat in “poor” shape still describes one that reliably holds water and not all boat donations could say that.

On the other end of the spectrum, boats and yachts that are worth more than $5,000 are subject independent appraisal when they’re part of a boat donation.  This appraisal should jibe with the amount the boat is eventually sold for.  If not, both the charitable giver and the selling organization open themselves up to further investigation by federal officials.

Another complication with high value boat donation is the so-called “50% rule.”  According to this stipulation, you are only allowed to claim 50% of your income in charitable donation in any given year.  So, if you don’t make very much money but inherited a large boat, you may have to sell it yourself and make individual contributions from that money rather than giving the whole boat to charity.

Charitable NPO exceptions to this include educational organizations that take at risk children on fishing trips or help instruct a college class in bass fishing.  As improbable as it sounds, a boat donated to the local police department for finding drowning victims is also an accepted type of direct donation. 

It is often a matter of personal taste when giving away an old boat (rather than selling it yourself), especially one that isn’t in very good shape.  You may have to consider whether it’s worth your while to itemize your tax return for the deductible value of a boat that was only fit for scrap metal. 

Often mid- to lower income individuals and families take standard deductions anyhow.  As such, donating a boat that isn’t in very good shape is less attractive than recycling options that pay off in hotel vouchers or cruise ship coupons rather than making pretenses about tax deductions from boat donation.

Caution is the new rule of law with boat donation.  Contact your favorite charity and ask them how they handle boat donations before you make a decision. 

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