Many major charities accept car donations, letting people donate used vehicles for a good cause and get a tax write-off in return. But the process is not as simple as making a phone call, dropping off your unwanted vehicle and reaping the benefits of a tax write-off. First, learn the charity's mission. If you have a specific intent in mind for the gift, let the charity know. If it cannot meet your goal, you may want to consider other ogranizations. Charities may use car donations in their charitable work. For example, a car donation may directly help needy people with transportation. Most likely, the vehicles will be sold to raise money for the charity's programs or general fund. If the vehicles are sold, find out which programs the revenues fund. Perhaps the money can go to a particular charitable service or cause you support. Finally, ask if the charity oversees car donations or pays a firm to do it. If a for-profit company handles the vehicle donations, find out how much money the charity will receive from the sale and how much will go to the for-profit company. This kind of information may help you direct your car donation to the charity and cause that match your interests and goals.


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Donating cars is an excellent way to help a favorite charity while getting rid of used vehicles. Many donors also use car donations for tax deductions. It is important to carefully document your car donation, in case the charity, the IRS or your accountant later has questions. Your personal records should include: (1) The charity's name and address; (2) The date and place you made the automobile donation; (3) A description of the car donation, including year, make, model and condition. Include a photo. (4) The value you placed on the car, which should not be more than the fair market value of the car. State how you calculated the value of the car donation. Include an appraisal, if the car is worth more than $5,000. (5) A history of your own purchase of the car. Was it a gift? Did you buy it? (6) Copies of the title, registration and receipts from the charity. Receipts from the charity should include an acknowledgement when the vehicle is collected, and a statement of the amount received when the vehicle later is resold by the charity.


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Car donation programs have grown so rapidly that the IRS and Congress decided to bring more oversight to the system. Officials were concerned about reports of abuse in charitable giving. Among the concerns: People seeking to dispose of unwanted cars were inflating the prices beyond their worth at tax time. In 2005 the IRS issued new and detailed rules to curb problems. Now car donation IRS rules require both the donor and charitable organization to keep detailed information on vehicle donations. If donors want to get their car donation tax deduction, they need to follow car donation tax law. Here's what the IRS expects: * Transfer ownership of the car donation to the tax-exempt charity. * Get a receipt from the charity when it receives the car. The receipt needs to include the charity's name and registration number. * Document the amount the charity gets when it sells the car for proceeds. The charity is required to provide written acknowledgement to the donor after the sale. * Be prepared to show how you calculated the value of the car, if the charity plans to keep it, or it is worth $500 or less. The charity needs to substantiate the value.


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When claiming a car donation tax deduction, you must use Form 8283, "Noncash Charitable Contributions," if it is valued at more than $500. Fill out Section A of the form if your total deduction for all noncash charitable donations, including your used car, is $5,000 or less. If it is more than $5,000, you likely will need to complete Section B. In some cases, donors also may need to file proof of a certified appraisal. For expensive car donations, it may be a good idea to seek the help of an accountant.


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