The business of car donations to charity is a slippery slope that’s best navigated after doing your due diligence and researching potential charities and intermediaries before donating your vehicle. Some charities are highly inefficient, which means that they’ll probably misuse their share of the proceeds from the sale of your vehicle, and others are basically no more than elaborate scams that will funnel the majority of the proceeds into their own coffers.
Thankfully, CharityMotors.org is neither inefficient nor disreputable, and you can claim the fair market value of your vehicle as a deduction on your taxes, which isn’t usually the case when you donate your car to charity.
Taking Tax Deductions for Vehicle Donations to Charity
CharityMotors.org is a 501(c)(3) nonprofit corporation whose website claims to “give you the biggest tax break” on your donation. Now, normally, this type of claim is a sign of ill repute, because the charity doesn’t get to decide how much you deduct. That’s the IRS’s job.
The first thing you should do when you decide to donate your car is to determine the fair market value (FMV) of the vehicle. You may never claim more than the FMV of the vehicle on your taxes, and usually, you have to claim the actual sale price or $500, whichever is less.
The IRS rules for claiming a deduction for your donated vehicle are very clear, and are as follows:
- If the vehicle is sold for $500 or less and the proceeds go to a charity, you may claim the FMV up to $500 for the sale of your vehicle. So if your car’s FMV is $700 and it sells at auction for $300, you can claim $500 on your taxes.
- If the vehicle sells for more than $500, you can claim the sale price, but you’ll need to fill out Section A of Form 8283 and attach it to your Form 1040.
- If the vehicle sells for more than $5,000, you can claim the sale price, but you’ll need to fill out Section B of Form 8283, have it signed by an officer of the charity, and attach it and a written appraisal of the vehicle to your Form 1040 as documentation.
- If the vehicle is sold as-is, fixed up and sold at a discount to an individual in need, or is retained by the charity for internal use, you may deduct the full FMV of the vehicle.
CharityMotors.org: Discounted Vehicles for Persons in Need
CharityMotors.org’s mission is “to provide transportation to low income individuals at below fair market value.” As such, they will accept your donation, possibly fix up the vehicle, and sell it at a 50 percent discount to a person in need. This means that the last rule above applies: You may deduct the full fair market value of your vehicle, regardless of the sale price.
In addition to selling cars at a discount to those in need, CharityMotors.org claims to pass on a large percentage of the proceeds of the sale to a charity of your choice or, if you don’t want to choose, a charity of their choice. According to their website, they give over $40,000 a week to more than 2,000 nonprofit organizations.
Sound too good to be true? I thought so, too. So I headed over to Guidestar to have a little look-see at CharityMotor.org’s IRS Form 990.
CharityMotors.org On Guidestar
Guidestar is a nonprofit organization whose mission is to educate the public about what makes a charity reputable and to provide easy access to charities’ IRS Form 990, which is a detailed tax document that tells you everything you need to know about how a charity spends its funds.
Now, a charity’s spending falls into three categories: Programming, which is (or should be) the whole purpose of the charity in the first place; administration, which includes overhead costs like rent, utilities, and toilet paper; and fundraising, which are the costs the charity incurs in an attempt to get people to donate money, goods, or services to them. A highly efficient charity puts at least 75 percent of its funds towards programming.
According to CharityMotors.org’s 2013 Form 990, an impressive 79 percent of their income of $7,899,046 went toward programming, with just 6.7 covering administration and 14 percent funding fundraising efforts.
This makes CharityMotors.org a highly efficient charity, and one that performs a valuable service by enabling low-income adults to purchase a vehicle at a deep discount, thus giving them wheels to get their kids to school, get themselves to work, and run out for diapers when it’s 5 degrees outside.
The Bottom Line for CharityMotors.org
If you want the opportunity to fund a reputable and highly efficient charity and get a killer tax deduction in the process, please feel confident donating your car to CharityMotors.org.
CharityMotor.org has received our 5 Star rating which is our highest possible rating.