April 16, 2018
Your Vehicle Donation Receipt: What Is It & Why Is It Important?
Photo by Audrius Strikaitis under Pexels Lisence
Ever wondered what a donation receipt is for, or why it really matters for donors and nonprofits alike? We’re here to break it down for you.
A donation receipt is not just an ordinary document, but it’s one that proves an individual’s contribution to a nonprofit charity or organization. Either in the form of an email, a letter, or even a postcard, the receipt is sent to the donor right after making a donation. While most nonprofits send their receipts during the year’s end, there are also some who do it within just a month.
What’s the Importance of Donation Receipts?
Donation receipts aren’t just for donors. As a matter of fact, organizations also need to have their own copies. There are different reasons why donation receipts serve as important documents for both nonprofits and donors.
Any nonprofit charity requires donation receipts for these intentions:
- To keep track of their donation history
With the receipts, charities can trace and review every single one of their donors and what they donated.
- Legal requirements
As part of the IRS policy, nonprofits should send donation receipts after individuals have made a contribution. Penalties may vary. Organizations may avoid receiving the penalty if they have a valid reason.
- Financial recordkeeping
Donation receipts make it easier for organizations to monitor and have an accurate understanding of their finances.
For donors, a donation receipt serves the following purposes:
- Verification
By receiving a donation receipt, donors would know that their contributions have made it to a legitimate nonprofit.
- Tax deductions
When claiming their tax deductions, individuals need to show their donation receipt as proof of documentation.
- Financial recordkeeping
With a donation receipt, donors will no longer worry about having to track their financial data.
What Are the Details Included in a Donation Receipt?
Although the Internal Revenue Service (IRS) has no standard format yet for a donation receipt, there are certain items that must be included in such a receipt. These are:
- Donor’s name
- Date of the donation
- Organization’s name, federal tax ID number, statement indicating that the nonprofit is a certified 501(c)(3) organization
- The amount of money or the description of the donated item/s
- A statement that indicates whether goods or services were provided in return for the donation
Although a donation receipt can be a simple letter or an email, there are certain exceptions. For contributions that are worth $250 and above, standard donation receipts should always be provided.
What If I Make Donations From My Payroll?
If you wish to have your donation deducted from your paycheck, you can use any of these documents as a donation receipt:
- A pledge card with a statement indicating that the organization did not provide services or goods in exchange for your contribution
- A pay stub, W-2 form, wage and tax statement, or another official form from the employer that reveals the withheld amount
Keep in mind that a payroll deduction of $250 or more is recognized as another contribution and is not accumulated.
Donation Receipts for Vehicles
For nonprofits that accept vehicle donations, the guidelines are different. If the estimated value of the automobile is from $250 to $500, a standard donation receipt is used. The receipt must also let the donor know that the tax deduction should not be more than the gross profit generated from the sale.
Organizations that decide to keep the donated vehicle must state their intention why they are doing so, and for how long they want it with them.
Get a Donation Receipt from Veteran Car Donations
Photo by RDNE Stock project under Pexels Lisence
Now that you’re aware of how important and helpful a donation receipt is, why don’t you get one from us? With a trusted platform like Veteran Car Donations, you won’t only receive large tax deductions, but you also have the opportunity to help thousands of our former military men and women who are struggling to make ends meet.
All we need from you is a vehicle that you no longer use. Whether it’s an old car, motorbike, camper, or a barely-running boat, we’ll be glad to have it with us in exchange for a donation receipt.
Would you like to enjoy a tax deduction for donating a vehicle that you no longer need? If yes, then contact us at 877-594-5822 or fill out our online donation form to start your car donation process.
For more information about tax deductions, feel free to check out our FAQs page. We highly recommend you talk to a professional tax consultant since certain rules apply for each state.