You can wish to donate a car in order to have peace of mind for making some contribution to the society. Another reason for donating the car is to create space for a new one, when the current vehicle becomes expensive to maintain. A final and appreciated reason for can donation is the tax advantage one can earn. However, the new tax laws have become little strict towards car donation tax deductions. Thus, you would like to have everything done legally and for this, the charitable organization can help you greatly.
After the process of car donation is over, your next big task is to prepare documents to get tax deduction advantage while failing your annual tax returns. So, here is the information about facts that you must expect from the charity to get ready with these documents.
In general, the charitable organization receiving the car donated by you should provide you with an acknowledgment containing information like:
o Your name and address.
o Information about the vehicle, including its make and model.
o Vehicle identification number of the car donated by you.
o Most importantly, the acknowledgment should mention that you have not received anything in return of the car donated by you. If this information is missing, you are not counted as eligible for tax deduction benefits.
o Information that must also be available on the acknowledgment is that statement that the charity representatives or owners don't have any blood relation with you.
After you donate car to a charitable organization, there are two possibilities that can arise. First, the charity might sell the car to raise funds for people in need. Second, the organization might keep the car for carrying out organizational work. The following sections will guide you about information that you must expect from charity in these situations.
Car Used By Charity
If the car is used by the charity, IRS would like to receive following information in the acknowledgment given by the charity:
o Declaration that the donated car will be used by the charitable organization.
o Information about the purpose of use and time duration for which it is used.
o Information about repair carried out on the car after donation.
o Declaration that the vehicle would not be sold before the mentioned time period expires.
An important point worth mentioning is in the case, when charity gives the car to a family in need. For this, the acknowledgment should mention it as a charitable action of the organization.
Car Sold By Charity
If the car is sold or auctioned by the charity, it must add the following pieces of information to the acknowledgment:
o Date of car sale.
o Amount received from the sale.
o Declaration of the transaction to be an arm's length, which means that you are unrelated to the final recipients.
Ignoring any of these facts can deprive you from the tax deduction advantage. So, make sure that you get suitably rewarded for your contribution towards charity by availing the necessary information.
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