If
a tax deduction is an important consideration for you when donating a car to
a charity, you should check out the charity; check the value of your car; and see
what your responsibilities are as a donor.Through this Publication 4303, the Internal
Revenue Service (IRS) and state charity officials provide general
Guidelines for individuals who donate
their cars.
A
companion brochure, Publication 4302, A Charity’s Guide to Car Donations,
provides guidelines for charities that receive donated cars.
Note:This
publication is not intended as a guide for corporate donors
Selecting
a Charity
If yo u are
eligible to deduct charitable contributions for federal income tax purposes
(see Qualifying for a Tax Deductionlater) and you want to claim a deduction for
donating your car to charity, then you should make certain that the charity is
a qualified organization. Otherwise, your donation will not be tax deductible.
The most common types of qualified organizations are section 501(c)(3)
organizations, such as charitable, educational, or religious organizations.
This publication refers to section 501(c)(3) organizations
Generally as
“charities.”
To
verify that an organization is a charity qualified to receive tax-deductible
contributions, see IRS Publication 78, Cumulative List of Organizations, anannual
list of most charities. Publication 78 is available online at www.irs.gov/eo
(under the Search for Charities topic) and at many
public libraries. You may also verify an organization’s status by calling the
IRS Customer Account Services division for Tax Exempt and Government Entities
at (877) 829-5500 (toll-free). Besure to have the charity’s correct name. It is
also helpful to know the charity’s address.Not all qualified organizations are
listed in Publication 78.For example, churches, synagogues, temples, and
mosques are not required to apply to the IRS for recognition of exemption in
order to be qualified organizations and are frequently not listed. If you have
questions, call Customer Account Services at the above number.If you want to
learn more about a charity before donating your car, use the resources listed
under
Assistance
Through the Charity, Through State Officials, and Through the IRS at the end of
this publication.
Qualifying
for a Tax Deduction
You
can deduct contributions to charity only if you itemize deductions on your
Schedule A of Form 1040. You must take into account certain limitations on
chari-table contribution deductions. For example, your deduc-tion cannot exceed
50% of your adjusted gross income.Other limitations may apply. Publication 526,
Charitable Contributions, provides detailed information on claiming deductions
and the deduction limits. It also describes the types of organizations that are
qualified to receive tax-deductible contributions. Publication 526 is available
online at www.irs.gov or by calling (800) 829-3676 (toll-free).
Determining the Value of Your Car
The maximum amount you can deduct on your income tax
return is the fair market value of your car. Fair market value is the price a
willing buyer would pay and a willing seller would accept for the car, when
neither party is compelled to buy or sell, and both parties have reasonable knowledge
of the relevant facts.Some fundraisers have mistakenly claimed that donors can,
in all cases, deduct the full value of their cars as found in a used car guide
(such as “blue book” value). A used car guide may be a good starting point to
value your car, but you should exercise caution. The IRS will only allow a
deduction for the fair market value of the car, which may be substantially less
than the “blue book” value.
Example: You
donate your car to the local high school for use by students studying car
repair. Your credit union representative told you that the “blue book” value of
the car is $1,600. However, your car needs extensive repairs, and after some
checking, you find that you could only sell your car for $750. Your charitable
contribution deduction may not exceed $750, the fair market value of the car.
For information on determining the value of your
car, see Publication 561, determining
the Value of Donated Property. If you used your car in a trade or
business, see the rules for contributions of capital gain property in Publication
526.
Recordkeeping and Filing
Requirements
Depending on the amount you are claiming as a
charitable contribution deduction, you may need to get and keep certain records
and file an additional form to substantiate your charitable contributions. See
the chart Recordkeeping and Filing Requirements that follows.
WRITTEN ACKNOWLEDGMENT FROM THE
CHARITY –
You must obtain a contemporaneous written
acknowledgment from the charity if the total deduction you are claiming for a
donated car is $250 or more. The acknowledgment must include the name of the
charity, a description (but not value) of your car, and one of the following:
■ a
statement that no goods or services were provided by the charity in return for
the contribution, if that was the case,
■ a
description and good faith estimate of the value of goods or services, if any,
that the charity provided in return for the contribution, or
■ a
statement that goods or services that the charity provided in return for the
contribution consisted entirely of intangible religious benefits, if that was
the case. You must get the written acknowledgment on or before the earlier of
the date you file your return for the year you make the contribution, or the
due date, including extensions, for filing the return. A charity can provide
either a paper copy of the acknowledgment to the donor, or a charity can
provide the acknowledgment electronically, such as via e-mail addressed to the
donor. Do not attach the acknowledgment to your income tax return; instead,
retain it with your records to substantiate
your contribution.
FORM 8283, NONCASH CHARITABLE CONTRIBUTIONS –
Depending on the amount of the deduction you claim
for the car, you may have to file an additional form with the IRS with your
Form 1040. If the deduction you are claiming for a donated car is greater than
$500, you must complete Section A of Form 8283. If the deduction you are
claiming is greater than $5,000,you must get a written appraisal of your car
(see Written Appraisal below). You must also complete Section B of Form
8283, which must include the signature of an authorized official of the
charity, and attach it to your return.
WRITTEN APPRAISAL –
Your written appraisal must be from a qualified
appraiser. See Publication 561,
Determining the Value of
Donated Property.
The appraisal must be made no more than 60 days before you contribute the car.
You must receive the appraisal before thedue date (including extensions) of the
return on which you first claim a deduction for the car. For a deduction first
claimed on an amended return, the appraisal must be received before the date
the amended return is filed. When you file your income tax return (Form 1040 or
Form 1040X), you will need to complete Section B of Form 8283, and attach it to
your return.If Section B is required and the charity sells or otherwise disposes
of a car within two years after the date of receipt, the charity must file Form
8282, Donee Information Return,
with the IRS. On Form 8282, the charity reports information identifying the
donor and itself, and theamount it received upon sale or other disposition of
the car. The charity must provide you with a copy of the form.The chart below provide
items of recordkeeping and filing requirements, based on the amount you claim
as a deduction.
State Law Requirements – Car Title
Generally, state charity officials ask the donor to
transfer the car title to the charity, to make a copy of the title transfer,
and to notify the state motor vehicle administration by updating the
information on the donor’s car registration about any sale or transfer. In some
states, however, there are exceptions to this titling process, and a third party,
such as the charity’s agent, may be able to hold an open title or insert a
dealer’s name. Before donating the car, you should remove the license plates,
unless state law requires otherwise. This may help you avoid any liability problems
after the car is transferred.
Assistance through the Charity,
Through State Officials, and Through the IRS
CHARITY ASSISTANCE –
A charity must make available for public inspection
its application for tax exemption, its determination letter, and its most
recent annual information returns (Forms 990). A charity also must provide copies
of these documents upon request (unless it makes the documents widely
available). A charity may not charge you for inspecting the documents, but it
may charge a reasonable fee for copying and mailing the documents.
Note: Certain charities, including
churches, synagogues, and mosques, are not required to file exemption
applications and annual information returns.
STATE CHARITY OFFICIAL
ASSISTANCE –
Many states require charities that solicit
contributions to register and file certain documents with a state charity
regulator, such as the state attorney general or the secretary of state. Most
charities must file in their state of incorporation and in other states where
they have activities. Many of the state charity officials provide useful
information about charities and fundraisers on Web sites and in brochures and
publications.A listing of state charity offices is available through the National
Association of State Charity Officials at www.nasconet.org. A listing of state
attorneys general is available through the National Association of Attorneys General
at www.naag.org.
Contact your state charity official if you have a
concern or complaint that a charity or fundraiser is not complying with state
laws.
IRS ASSISTANCE –
The IRS can answer your tax questions and can
provide tax forms, publications, and other reading materials for further
assistance. IRS materials are accessible through the Internet at www.irs.gov,
through telephone ordering at (800) 829-3676, and at IRS walk-in offices in
many areas across the country. The IRS also must make available the charity’s
application for tax exemption, determination letter, and Form 990.If you have a
concern or complaint about a charity,write to IRS Examination Division, Attn: T:EO:E,1100 Commerce Street, Dallas, TX
75242.
SPECIALIZED ASSISTANCE ON
TAX-EXEMPT ORGANIZATIONS THROUGH THE EXEMPT ORGANIZATIONS (EO) DIVISION OF THE
IRS:
CustomerAccount Services
(877) 829-5500 (toll-free)
Internal Revenue Service
TE/GE Customer Account
Services
P.O. Box 2508
Cincinnati, OH 45201
IRS tax forms and publications useful to donors are
available on
the EO Web site above and through the IRS services
noted under
General IRS Assistance on the back panel.Form 1040, U.S. Individual Income Tax Return Form
1040, Schedule A, Itemized
Deductions
Form 8282, Donee
Information Return
Form 8283, Noncash
Charitable Contributions
Publication 526, Charitable
Contributions
Publication 557, Tax-Exempt
Status for Your Organization
Publication 561, Determining
the Value of Donated Property
Publication 1771, Charitable
Contributions – Substantiation
and Disclosure
Requirements
Publication 4302, A
Charity’s Guide to Car Donations
GENERAL IRS ASSISTANCE ON THE LATEST
TAX LAWS, FORMS AND PUBLICATIONS, AND FILING INFORMATION:
Website: www.irs.gov
Federal tax questions ……………………….. (800)
829-1040
Small business federal tax questions
…… (800) 829-4933
IRS tax forms and publication ……………..
(800) 829-3676
IRS tax fax …………………………………….. (703)
368-9694
(Dial from a fax machine [with a hand-held
telephone as part of the fax machine] and follow voice prompts to get forms
faxed to you.)
0 comments:
Post a Comment