Car Donation Programs – Proceed with Caution

Car Donation Programs – Proceed with Caution

It sounds so alluring. The ad or solicitation says : ” Receive full blue sky book value ! You determine the value of contribution ! Any condition of car, even junkers ! absolve pickup ! ”
You think : “ This is great ! I can get rid of that clunker, get a healthy tax discount, and help a charity, besides ! ”
But, you should besides ask : “ Will my contribution in truth help a charity or person in want ? Is my contribution very deductible on my taxes ? If so, how much can I deduct ? ”

How will my donation help a charity?

first, if you think your old car will be fixed up for person in indigence to drive to work — think again. only a few charities attempt to pass vehicles on to needy members of the public. The fortune of your lovable clunker is more likely the car auction or the junkyard for salvage prize only.

Different types of vehicle contribution program arrangements have been used in Michigan including where :

  1. The charity operates the program itself, thus keeping the benefits (after deducting operating costs such as towing and auction fees) for its charitable purpose;
  2. The charity contracts with someone to run the donation program for a percentage of sales or a fee; or
  3. The charity merely gives a professional fundraiser or business permission to use its name for a fixed monthly fee. You, the donor, are led into thinking that your donation is to ABC Charity; but it really goes to XYZ Fundraiser. The charity will receive its monthly payment regardless of whether you give anything to this program.

Is my donation deductible?

Be aware that your contribution is deductible entirely if you file kind 1040 and itemize deductions. Your contribution besides must be to a “ qualify organization ” eligible to receive tax-deductible charitable contributions. If the charity is not a qualify 501 ( hundred ) ( 3 ) arrangement, your contribution may not be deductible. Search on-line for charities through the IRS web site .

How much can I deduct on my tax return?

According to IRS publications, the sum you may deduct depends on factors such as

  1. Whether you claim a deduction of more than $500;
  2. The gross proceeds from the sale of car by the charity;
  3. The fair market value of the car;
  4. Whether the charity will make significant use of the vehicle or make material improvement to it; and
  5. Whether the charity will give it, or sell it at a steep discount, to a needy individual.


broadly, if you claim your donate vehicle has a prize of more than $ 500, you can deduct the smaller of the gross proceeds from the sale of the car by the organization or the car ‘s fair marketplace value. Different rules apply if you claim a deduction of $ 500 or less. For more information, see IRS Publication 526 or consult your tax adviser. A copy of the publication is available on the IRS web site .

What do I need to know about passing title to the charity?

Be very timid when donating an car if you are not accompanying the recipient role to the Secretary of State ‘s position to transfer claim. If the title is not reassigned to a charity or person who is receiving the donate vehicle, then you are presumed to be the owner of the car, and you may be liable for tickets, tow, and storage fees. In a event where the transaction will not be completed at the Secretary of State ‘s office, you must have a “ record of the sale ” in addition to sign over the entitle .
Michigan law requires a person who has donated a vehicle to keep a photocopy of the transfer title or record of the “ sale ” for 18 months. A phonograph record of sale is a form or text file that includes the list, address, driver ‘s license numeral, and signature of the person to whom the fomite is sold and the leverage price and date of sale of the fomite. For more information contact the Michigan Secretary of State ‘s office or visit their web site .

What else do I need to know?

Remember, if you donate your car, always ask for a federal Form 1098-C ( Contributions of Motor Vehicles, Boats, and Airplanes ) or a statement containing the lapp information from the charity. If you do not attach the Form 1098-C or a statement containing the lapp information with your tax return key when you file your taxes, your contribution will not be deductible. If the donate vehicle is going to be sold, which is normally the case, you wo n’t get Form 1098-C until after the sale. If your tax filing deadline is approaching and you are silent awaiting the sale information, you may have to either file for an IRS reference or file your taxes and amend the return when you receive the information. See IRS Publication 526 .
besides, most organizations asking for a contribution of your car in Michigan must be registered with the position of the Attorney General. To check if a charity is registered, search our database. If the organization does not appear to be registered, call the charitable Trust section at 517-373-1152 to see if it is exempt from registration .
For more general information about charitable contributions, visit the IRS web site or consult a attest tax adviser.

Where can I go for help?

Consumers may besides contact the Michigan Department of Attorney General ‘s charitable Trust department at :
charitable Trust segment
P.O. Box 30214
Lansing, MI 48909
517-335-7571
Fax : 517-241-7074
Email
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source : https://shoppingandreview.com
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