You’ve finally decided to get rid of your boat, the trailer and maybe the car that’s taking up space in the driveway –maybe the not-so-seaworthy boat has been filling half the garage for years now. You don’t want to sell it; want ads are expensive and who wants strangers coming over at all hours of the day and night. However to a charity, even the most broken down vessel, vehicle or trailer is worth a few hundred dollars (or less), and helping a charity is always a good thing. Don’t put up with the hassle of listing the item for sale or dealing with prospective buyers. It is simply more than most people want to deal with.
In situations like this, donating your old or unwanted vehicle or vessel can be a quick and painless way to get rid of it while also doing a lot of good – you will also get a nice tax write-off. Before you pick up the phone and call up the first organization you find and offer your car or boat donation, you should understand exactly how the process works, and how you can maximize the benefits to both the organization and yourself.
How Donating Works
It is rare that a charity will actually use your donated vehicle or boat for transportation or in a charity program; if it’s still safe and in good condition, some charities will give the vehicle to a needy individual. In nearly all situations, the charities benefit from the sale of the donated vehicles and boats. Once you schedule a pickup and sign over the vehicle or boat, the charity is required by the IRS to sell it and provide you with a 1098C receipt.
Not all charities want to be in the business of selling cars and boats, they often use auction services and, in some cases, larger organizations that deal with the processing. Auction services either work with one particular charity, or they give donors the option to choose which charity program receives the proceeds from the sale. Undoubtedly, these companies perform a valuable professional service, they can be helpful when your church or charity informs you they are not equipped to handle your donation process. Generally a portion of the proceeds from the sale of the vehicle or vessel – will go towards the fees the auction services incur while processing your donation. Charities do not fund their programs based on a single donation from any single donor. Charities that process boats and cars generally receive hundreds of these types of donations and only benefit when all of them are sold promptly. The advantage to you is they will do the work and send you the receipt.
Tax Advantages
One reason that many people choose to donate unwanted vehicles is the tax advantage that comes from doing so. In fact, in some cases, the amount of the tax write-off is greater than what you would net by selling your boat or vehicle. The sooner you donate your item, the sooner you can cancel expensive insurance policies and storage contracts, as well as yearly ongoing registration fees. These factors should all be considered when you are weighing the choice between selling something yourself or giving it to charity.
Conversely, as with many issues related to the IRS and taxes, it is simple process if you donate an automobile or boat that you can deduct a minimum allowance worth up to $500, or if your item sells for more, the charity will report to you the sales amount and you can take that as a deduction. The amount you’re entitled to claim depends on the final sale value of the car or boat. The charity reports to you and the IRS on the 1098c form how much they realized from the sale and the date it was sold. Those reports are sent into the IRS yearly. You will need to make sure to fill out a W9 with the charity so they have your proper tax identification number. The donation can also be split among a married couple if there is more than one name on the title.
You can be sure that you are donating your car or boat to a recognized 501(c) (3) charity– this is something you should do. Get the full name of the charity from their representative and their EIN number, and if possible, a copy of their exemption letter. The IRS.gov website has a section where you can verify if a charity is in good standing and has a currently 501C3 exemption status. Also, if you’re using an auction service, ask how they process donations. If they make a flat rate donation regardless of the value of the vehicles given to them, then you may not be eligible for a tax deduction.
One Last Reminder
When you donate your vehicle or boat, make sure you have an original copy of your title or registration, and that you properly sign it and be sure to notify your DMV of the transfer. This will help you avoid fees for unpaid parking tickets or other violations on a car you no longer own. Also make sure the storage charges are paid at the marina, and if the boat is in a repair shop, make sure those are paid as well. If you had borrowed money on the boat and there is a lien on the title, having a copy of the lien release letter will speed up the process.
Donating your old or unwanted boat or car offers the chance to lower your monthly fees or free up space in your garage while still helping others. Before you hand over the keys and the title, do your homework to ensure that everyone truly benefits from the transaction.
Image provided by Dave Parker from Flickr’s Creative Commons
About the Author: Victoria Hasselbein is a nonprofit management consultant with more than a decade of experience in managing major gifts and individual donations for a wide range of charities. One of her most successful fundraising events was a “Clunkers for Kids” event that brought in more than $10,000 worth of donations from cars, boats, motorcycles and one riding lawnmower.
