|By PR Newswire||
|December 17, 2013 09:10 AM EST|
NEW YORK, Dec. 17, 2013 /PRNewswire-USNewswire/ -- Getting mileage out of used cars by donating to charity may still be possible as 2013 winds down. The National Kidney Foundation (NKF), which has been running Kidney Cars, the oldest vehicle donation program in the nation for nearly three decades, offers some pointers for would-be car donors on current tax law* and charity selection.
The Current Tax Laws for Noncash Donations
Noncash donations must be of value to the organization. People seeking to donate items that they no longer have use for cannot receive a tax deduction unless the charity can monetize the gift in a significant way.
Donated cars are an example of a noncash gift that in most cases, offers value to charities. Used car are often sold at dealer-only auctions. Deductions based on "fair market price" listed in publications such as the Kelley Blue Book, regardless of whether the car sold for much less, are a thing of the distant past. The auction sale price determines the tax deduction amount if a car sells for more than $500. If a car sells for less than $500, then the taxpayer would deduct the fair market price or the auction price—whichever figure is smaller. Charities are required to provide receipts to donors with exact amounts for which the car sold, so there's no research involved on the donor's part and no risk of accidentally taking a deduction that's too large.
Selecting the right charity is the key to a win-win donation experience. Responsible and credible organizations will make the effort to sell a vehicle for the highest value possible. It is in their best interest to conduct auctions successfully in order to meet their fundraising goals.
When making this selection, donors should pay attention to a number of factors, including the following:
The organization should be a certified nonprofit. Some groups may accept charitable donations, but not all are necessarily nonprofit by a legal definition. To qualify for a tax-deductible donation, choose an organization that has a 501(c)(3) tax-exempt status granted by the IRS. NKF is a 501(c)(3), so all contributions to Kidney Cars are tax-deductible.
Second, the charity should be fiscally responsible and most of the funds raised should go directly to programs. Some organizations may keep an exorbitant percentage of the auction's earnings for administrative and marketing costs—sometimes between 50 to 90 percent. There are organizations that donate 90 percent of the money raised through their car donation program to charity, but the charity uses half of that 90 percent for administrative costs. The NKF, on the other hand, designates nearly 80 percent of the proceeds directly to its mission. In almost three decades, Kidney Cars has received more than 700,000 used cars that have pumped $160 million into NKF programs including patient services, advocacy, education and research.
The Other Advantages of Charitable Vehicle Donations
In addition to the possible tax deduction, there are other benefits to vehicle donation. It relieves the financial burden of registration fees, insurance and taxes, is a convenient way to get rid of an unwanted car and is environmentally-friendly. This is especially true when donating to Kidney Cars since NKF offers free pick-up service and drop-off locations in major metropolitan areas across the U.S. and sells all cars at auction or for parts.
The National Kidney Foundation is the leading organization in the U.S. dedicated to the awareness, prevention and treatment of kidney disease for hundreds of thousands of healthcare professionals, millions of patients and their families and tens of millions of Americans at risk.
For more information about the National Kidney Foundation's Kidney Cars, visit www.kidneycars.org or call 1-800-488-CARS.
*This does not constitute tax advice.
SOURCE National Kidney Foundation