The short answer is yes, in Florida you can donate a vehicle to charity. Donating a vehicle is a great solution if you have an older car sitting around that you want to get rid of, but don’t want to go through the hassle of finding a buyer and negotiating a fair price. Not only does donating a vehicle to charity fulfill a philanthropic goal, but you may even receive a tax deduction.
Once a vehicle is donated, a charity can choose to either use the vehicle for its own purposes or sell the vehicle for a profit. Some charities offer dedicated services for vehicle donations and may even pick up your vehicle on your behalf.
How Do I Claim a Tax Dedication on My Donated Vehicle?
Donors can claim a tax deduction on a donated vehicle if certain criteria are met:
- the vehicle donation must be made to a qualifying 501(c)(3) charitable organization;
- the donor must itemize deductions on his/her federal tax return;
- the donor must get either a written acknowledgment or a Form 1098-C (Contributions of Motor Vehicles, Boats, and Airplanes) when it comes time to file tax returns; and
- if the car being donated is worth more than $5,000 and the charity doesn’t plan to sell it, the donor needs to get an official written appraisal at least 60 days before the donation takes place.
How Big of a Tax Dedication Can I Receive by Donating My Vehicle?
A donor can claim a deduction of the vehicle’s fair market value on the day the vehicle is donated if the charity keeps and uses the vehicle for its own charitable purposes or if the charity sells the vehicle for $500 or less.
If the charity sells the donated vehicle for more than $500, a donor can deduct the amount charity sold the vehicle for. However, the donor’s tax deduction is limited to the amount of proceeds received by the charity, even if the donor believes the vehicle to have been worth more.
What Paperwork Do I Need to File?
Once a vehicle is donated, the donee charitable organization will provide the donor with a written acknowledgment or a Form 1098-C, the proper form to report contributions of motor vehicles, boats, and airplanes. The proper form(s) to be filed with the donor’s tax returns is dependent upon the amount to be deducted and can be found on the IRS’s website.
If the donor is to deduct $500 or less, then no particular form must be filed. However, it is advised the donor keeps records of the vehicle in the case of auditing.
If the donor is to deduct between $501 to $5,000, the donor must file a Form 1098-C or written acknowledgment, plus Section A of Form 8283. The written acknowledgment must contain the donor’s name, the donor’s Social Security number or taxpayer identification number, the vehicle identification number (VIN), the date of the contribution, and confirmation that the charity didn’t provide any goods or services in exchange for the donation or if they did, an estimate of the value of the goods and services provided.
If the donor is to deduct more than $5,000, the donor must file a Form 1098-C or written acknowledgment, plus Section B of Form 8283, and a written appraisal of the vehicle if the charity does not plan to sell it.
What are Some Safeguards I Should Follow When Making a High-Value Donation?
Whenever making a high-value donation, a donor will want to make sure he/she is shielded from liability in the case something goes wrong in the future. There are a few steps a donor can take to add a level of protection when donating:
- remove the license plate from the vehicle;
- get a receipt from the charity documenting the donation;
- file a transfer form to sign over the title (the form and process may differ depending on the state the donor resides in); and
- keep photos of the vehicle and its condition at the time of the donation for your records.
