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10 Tips: Donate a car or boat to charity the right way

Donate your vehicle or boat to charity, avoid the hassles of selling it and score a tax deduction. Everybody wins, right? Maybe not. Use these tips:

By Laura T. Coffey, Times Correspondent
Published January 13, 2008

Donate your vehicle or boat to charity, avoid the hassles of selling it and score a tax deduction. Everybody wins, right? Maybe not. Use these tips:

1 Avoid middlemen. Numerous for-profit intermediary organizations advertise aggressively on TV and billboards, offering to help you donate your vehicle. These groups typically keep about 50 to 90 percent of the vehicle's value. Check directly with charities to find out whether they accept donations directly.

2 Find a worthy charity. Research charities' track records online at www.give.org/reports/index.asp and www.charitynavigator.org.

3 Check the math. If you do use an intermediary organization, ask the organization how much of the car's or boat's value will go to charity. If the organization simply gives charities flat fees - say, $100 for a used vehicle regardless of its value, or $2,000 a month - your donation may not be eligible for a tax deduction.

4 Know the status of your recipient. In order for you to qualify for a deduction, the charity that gets your donation must be an IRS-approved 501c(3) organization. Your church, synagogue, mosque or temple likely qualifies (but check to make sure). You can visit www.irs.gov and search for Publication 78 to find other qualifying non-profit organizations.

5 Do the delivery yourself. Once you've identified a worthy charity, it will have to pay someone to pick up your car or boat. Help the charity maximize the benefit of your donation by dropping off the car or boat.

6 Transfer the vehicle with care. Eliminate all risk of running up parking tickets and other violations after you've said goodbye to your vehicle by retitling the vehicle to the charity, and report the transfer to the Florida Department of Highway Safety and Motor Vehicles. Never agree to leave the ownership space on the charity donation papers blank.

7 Your estimate of the donation's value probably won't cut it. If your car or boat is worth more than $500, the IRS is going to want to see evidence of how much the charity got for it. (Most charities that accept these donations sell them for cash.) You'll need to get a receipt from the charity revealing exactly how much money it made.

8 Know when you can report the fair market value. You won't need evidence of the sales price if the charity keeps the vehicle or vessel and uses it in its charitable work or if your donation is worth less than $500. Then you can report its fair market value based on listings from Kelley Blue Book (www.kbb.com) and similar sources.

9 Keep a thorough paper trail. If your donation is worth more than $500, you'll have to attach IRS Form 8283 to your tax return. If it's worth more than $5,000, your documentation must include an outside appraisal. You'll need proof of the donation, such as a receipt from the charity and a copy of the title change.

10 Be detail-oriented. The paper trail may seem cumbersome, but this may be one of the biggest charitable donations you make. By taking the time to dot the i's, you can make sure that the charity gets the most benefit and you get the biggest possible deduction.

Laura T. Coffey (laura@tentips.org

Sources: Charity Navigator (www.charitynavigator.org); Consumer Reports Money Adviser; Better Business Bureau (www.bbb.org); Internal Revenue Service (www.irs.gov/charities/)

[Last modified January 11, 2008, 21:44:53]