Do you have an old vehicle that’s been sitting in your driveway for years collecting dirt and rust? Maybe it’s the set of wheels you used in college or a minivan from when the kids still lived at home. You could sell it, but likely wouldn’t be worth the hassle. Instead, an easy way to get it off your hands and squeeze the last bit of value out of it is to donate it for a tax deduction! There is a plethora of charities that will happily find a way to make some use of even the most rusty of rides.
Check If It Runs
Before you call up any charity, check to see if the vehicle will start. If it doesn’t, it may just need a jump. Take the time to give it a jump start, because if you can get it to run you’ll be able to write off a greater value on your tax return.
If it still won’t turn over after you’ve charged the battery, don’t worry. You’ll have to choose from a narrower selection of charities, and you won’t get as much of a tax break, but you can still donate the vehicle. Many charities are capable of picking the vehicle up from your location; you’ll just have to schedule an appointment.
What You’ll Need
Some paperwork is required in order to transfer ownership of the vehicle to the charity. The first thing you’ll need to locate is the title; this is the document that specifies the owner of the vehicle. If the title is in your spouse’s name, you’ll need to ask the charity whether your spouse needs to be present for the transfer or if they can just sign a note. If it has been years since you acquired the vehicle, and you can’t find the title, visit a Secretary of State’s office for a replacement. In this case, whosever name is on the title, that person must be present or sign an Appointment of Agent form.
If you took out an auto loan when you purchased the vehicle, you’ll also need a lien release from your lender. Typically, you’ll receive the release when you pay off the loan, but sometimes a lender neglects to send out the release.
Reporting the Donation
When you donate the vehicle, a charity will often use a value database like Kelley Blue Book to let you know the value of the donation. The IRS also accepts qualified appraisals, but if you’re donating an old vehicle, there’s not much sense in paying for one.
For a deduction of more than $500, you need to obtain written acknowledgment from the charity in question. It should include your name and taxpayer identification number, the vehicle identification number, the date of the donation and a statement that no goods or services were received in exchange for the donation. When you file, you’ll need to fill out IRS Form 8283. For more information about filing requirements, see IRS Publication 4303.
Remember, a deduction reduces your taxable income, not your tax amount. For example, if you donate a vehicle worth $2,000, it will reduce your taxable income by that amount. If you’re in the 28 percent tax bracket, you’ll pay $560 less in taxes.
Don’t forget to remove the license plate!
Original Source: http://lmcu.frc.finresourcecenter.com/Auto_Buying_78855.html?article_id=2363