Learning how to donate a car to a family member is much easier than you may think but is more complicated than just giving it away. Car donation recipients should receive the car though a charity. This is necessary for the proper paperwork to go through. However, if you do not care about getting a tax deduction, then handing over the keys and changing the title and registrations makes it easy. Donating of a car is a great way to avoid negotiations about trade in values with a dealer.
It will be necessary to determine the approximate value of the vehicle. This can be as easy as going online and looking it up on Kelley Blue book. Check with the charities as some will only let you take the deduction for the sale value of the car while most will allow the donor to use the fair market value when donating an old car.
Make sure that the vehicle has been inspected and that you have taken plenty of photographs. This is needed just in case the vehicle is damaged during transport before the family member receives it. Always have photos and records so you are not held liable should damage occur.
Contact charities that regularly deal with car donations and explain that you want to donate it to the charity but then have it turned over to a family member. Make sure that you provide details about the family relationship and why that person is experiencing hardship. As long as there is need established then the nonprofit can work in and legally take care of the donation.
Some qualified charities include AIDS charities, Vietnam Veterans of America, Kidney foundation, Salvation Army, American Cancer Society and most schools, clinics, museums, churches, religious institutes, hospitals and libraries.
It is important to have all the documentation necessary to be able to claim the tax deduction. A tax receipt that contains the charity’s tax id number and name as well as the donation date and donors name will be needed. Make photocopies in case anything happens to the original. It will also be necessary to change the title of the vehicle and let the insurance company know that you no longer have the vehicle. To claim a deduction fill out an 8283 tax form. It is necessary to have 3 copies of everything.
If the vehicle being donated to a family member and the value is less than $10,000 then it is possible to simply gift it to the individual. The family member that receives the car will not have to pay any taxes on it though whether you can take a deduction from the gift in your taxes.
If the individual can be claimed as a dependent then the car can be considered part of the money needed for their upkeep and income. The market value of the car can be deducted as it is included as part of this contribution. Check the details about the maximum value that can be deducted on the qualified dependent.