by Michael Lodge
On the radio we hear a lot of advertisement of charitable organizations want you to donate your car to charity. And they usually have a jingle that you can’t get out of your head. So let’s talk about how this works when donating a car and what is expected from you in the way of record keeping.
Question: I donated a used car to a qualified charity that the charity sold immediately after I donated it. I itemize my deductions and would like to take a charitable contribution deduction for the donation. Do I need to attach any special forms to my return? What records do I need to keep?
Your record keeping and filing requirements depend on the amount of your claimed deduction.
1) If you claim a deduction of at least $250 but not more than $500 for the car donation, you will need a written acknowledgment from the charity. You must obtain the acknowledgment by the earlier of the date you file your return for the year of the donation, or the due date of the return with extensions. The acknowledgment must include the following:
- A detailed description of the car.
- A statement as to whether or not the charity provided any goods or services in return for the car other than intangible religious benefits and if so, a description and good faith estimate of the value of the goods and services.
- If the charity provides solely intangible religious benefits, a statement to that effect.
Do not attach the written acknowledgment to your return. Instead, retain it with your records to substantiate your donation.
2) If you claim a deduction of more than $500 but not more than $5000 for the car donation, the written acknowledgment from the charity must be timely, must be attached to your return and must include all of the information listed in (1) above, plus the following additional information:
- Your name and taxpayer identification number (TIN).
- The vehicle identification number (VIN).
- The date of the contribution.
- A certification that the charity sold the car in an arm’s length transaction between unrelated parties.
- The date the car was sold by the charity.
- The gross proceeds of the sale.
- A statement that the deductible amount may not exceed the amount of such gross proceeds.
For this acknowledgement to be considered timely, you must generally receive it within 30 days of the sale of the car. In lieu of a written acknowledgment, the charity may provide you a completed Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, which contains the same information.
You must also complete Section A of Form 8283, Noncash Charitable Contributions, and attach both the written acknowledgment and the form to your return.
3) If you claim a deduction of more than $5,000 for the car donation, you must obtain a written acknowledgment with the information described in both (1) and (2) above. You must also complete Section B of Form 8283 and attach both the written acknowledgment and the form to your return. An appraisal is not required if your deduction is limited to the gross proceeds of the sale.
If you have questions regarding this subject, please send it to: firstname.lastname@example.org