6 Tax Tips For Donating a Motorbike to Charity
So you decided to part with your motorcycle and donate it to like this charity. Donating the right way allows you to maximize your tax deductions and benefits while helping a good cause at the same time. But before doing that, take these donation tax tips into consideration.
- Seek professional advice.
When it comes to giving any charitable donations, it is always important to seek advice from a tax professional. Each charity donor has different tax situations, thus it is best to ask for expert guidance.
Additionally, you might also want to consult the IRS in regards to claiming your charitable donation. You can gain access to publications, informational reading materials, and tax deductibles through the IRS’s official website.
- Make sure to donate to a charity that is eligible for a tax deduction.
People who donate cars to charity often make the mistake of making donations to charities that are not eligible for a tax deduction. Qualified charities are those that are recognized by the IRS as 501(c)(3) organizations such as educational, religious, and charitable organizations.
On the other hand, although religious organizations count as qualified under section 501(c)(3) organizations, they are not obliged to file their 501(c)(3) status.
- Make sure to get the receipt.
After donating your motorcycle, make sure to get the receipt from the charity you chose to donate it to. You must also get a written acknowledgment from them if the overall deduction for your donated vehicle.
- Take note of the Fair Market Value concept.
Keep in mind that the IRS only allows a deduction for your motorcycle’s fair market value.
For any vehicle that is worth over $500, the owner must complete Section A of the IRS 8283 Form and have it attached to his or her tax return.
On the other hand, for vehicles that are over $5000 in value, the owners are required to obtain an independent appraisal. He or she must also complete Section B of the IRS 8283 Form. To verify the vehicle’s value, owners are recommended to take photos of the vehicle and save the official receipts for the upgrades or new tires to verify its overall value.
- Keep in mind that acquiring a Fair Market Value is uncommon.
Take note that it is not certain for your motorcycle to meet the precise fair market value requirement. In fact, only about 5% of donated vehicles are suited for use by the charity recipients. About a third of most donated vehicles are either auctioned or junked.
Thus, unless your motorcycle is in great condition, it will most likely be auctioned or it might end up in a vehicle salvage yard.
- Consider donating to charity in a different way.
Instead of donating your motorcycle for it to be either junked or auctioned, you might want to consider selling it yourself and then donate the proceeds to your chosen charity. Doing this might help you obtain more money and it also allows you to make the most of your tax benefits.
Now that you know the basics of donation tax for vehicles, it’s about time you chose the best charity to donate your motorbike too.