San Diego Estate Planning Lawyer Blog
You can donate your old car to raise money for your favorite charity and also qualify for an income tax deduction. Throughout California, local and national charities accept car donations. In some instances,
even if your car does not run, you can still claim the fair market value, which might be more money than you could afford to donate in cash. It also may be one part of a larger charitable component of your estate plan.
By donating a car to charity, it provides you with a way to help others instead of disposing of the vehicle in a junk yard. However, donors must follow some basic steps for the process to go through.
First, you must establish the value of the vehicle. This can easily be done using the Internet. There are many sites available, such as Edmunds.com, or the Kelley Blue Book guide at KBB.com to determine a used vehicle value. You need to know the value of your vehicle in order to claim a tax deduction for your charitable contribution, Furthermore; the charity might want to know the value of your vehicle before accepting your donation.
Second, decide on what charity you want to receive your car. You can find charitable organizations by checking the phone book, contacting city hall, or by doing a keyword search on the Internet. If you don’t have a particular charity in mind, there are usually dozens of nonprofit organizations that specialize in selling cars to raise money for charities. In California, these organizations must be a registered charitable trust in order to solicit donations.
Third, take the vehicle to the charitable organization or arrange for the vehicle to be picked up. Although some charities are willing to come and get your vehicle, many others are not, and may ask you to save them money by either driving the vehicle yourself or having it towed.
Fourth, be sure to release the title by dating and signing it as the registered owner. If you cannot find your title, complete an “Application for Duplicate Title.” This can be found at the Department of Motor Vehicles. Currently, the duplicate tile fee is $18.00, but can vary depending upon the size or type of vehicle. California also requires you to include the odometer mileage at the time of the donation.
The charity must sign the title and complete the title transfer within 30 days. The charity will have to pay a title transfer fee, so don’t be surprised if they ask if you are willing to pay for that as well. However,
when a charity makes a title transfer, there is no payment of any taxes.
California also requires the charity organization to provide you with a receipt of your donation within 90 days. The receipt must include the model, age, mileage and condition of the vehicle. If the charity sells the vehicle, it must provide you with the sale price. Once you get this receipt, you can use it to claim a tax deduction at the end of the year on your tax return by filing IRS Form 8283.
You are limited to a deduction equal to the value of the vehicle, if the charity keeps the vehicle, or for the value of the sale price, when a charity sells your vehicle and keeps the profit.
If you have any questions about charitable organizations or income tax deductions as they relate to your estate plan, please call the Law Office of Scott C. Soady to learn more.