If your boat is costing you money in repairs, taking up space in your backyard, or just not a model you're interested in anymore, you could consider donating it to charity. You'll be contributing to the improved operations of impactful charitable missions, and you can claim a boat donation tax deduction.
An important requirement for this process is concretely following IRS (Internal Revenue Service) tax deduction rules. They're not as straightforward as you'd think, but don't worry—this article breaks everything down. Learn how tax deduction on a boat donation works, the IRS rules that'll guide your tax deduction filing process, and the best ways to maximize your tax savings.
The value of your boat and what the charity does with it after donation determine your tax deduction. There are two main scenarios.
The FMV of your boat is what it is worth on the open market. If the charity decides to use your boat, it's important to generate an accurate IRS-guided FMV for it, as this will help your tax deduction claim.
In all, remember to regularly check with the IRS guidelines for vehicle donations, as it'll help you avoid common mistakes.
You're eligible for a tax deduction on a boat donation if you fulfill these two requirements:
You'll need to keep certain documents on hand when filing for a tax deduction. These documents include:
The charity receiving your boat donation must send you a CWA, whether they sell or use your boat. This acknowledgment should include details like the organization's name, the date of the donation, a description of the boat, and a statement confirming if there was an exchange of goods and services for the boat. See more in the IRS Publication 1771.
When filing for a tax deduction of more than $500 on your tax return, you must fill out the IRS Form 8283, Noncash Charitable Contributions. This is where you'll need the documentation about your boat's FMV value. The form requires you to accurately report on very specific details about your donation and the boat's value.
If the charity sells your boat for more than $500, it must provide a written document with the sale price, which is the amount you can use as a tax deduction. The document, Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, must be provided within 30 days. It should contain the date of the boat's sale, a statement confirming that the sale wasn't to an employee or a related party at a discount, and the gross proceeds from the sale.
If you’ve received an appraisal from an expert marine surveyor, you'll need it when claiming a tax deduction. The appraisal must contain specific details about how and why your boat is worth $5,000 or more. See IRS Publication 561, Determining the Value of Donated Property, for more information.
When claiming a tax deduction on boat donations, here are a few important things to note:
Want to streamline your boat donation tax deduction process? Follow these simple yet effective steps.
Your choice of charity will not just determine how much you get to claim on tax deductions but is also reflective of your values. The right charity has a track record of efficiency and transparency and will work towards getting you the best possible deal on your boat.
At Rawhide, we've processed vehicle and boat donations for over 30 years. Our process is transparent yet simple for donors—we do all the hard work in the background.
Wanting a tax break on a boat donation is a slippery slope. One easy way to bypass it is consulting with a professional. If you have doubts or need to confirm rule amendments or updates, hiring a tax advisor or accountant is your best bet for getting clarity and closure.
Tax advisor fees too high? Try contacting the charity directly for guidance. Some charities help potential donors save money on hiring professionals by offering free consultations with their team of in-house professionals who can help with the filing process. At Rawhide, you can find quick answers to general boat donation questions when you visit our FAQs page. If you need something more in-depth, please feel free to contact us directly.
For the highest valuation, aim to donate your boat during peak seasons, usually between April and July. This is when boat sales are high, so you can expect your boat to have a worthwhile FMV. This will consequently increase the amount of your tax deduction claim when you file.
If you've owned the boat you're donating for a long time, do you know where the title is? Don't wait until it's too late to check, as this can hamper a seamless transfer of ownership. Can’t find your title? No problem. Immediately order a replacement or duplicate title and ensure other forms of proof of ownership—like your insurance papers or registration documents—are intact.
State requirements often vary, so be sure to learn which specifically applies to yours. Understanding your state laws and any additional steps you need to take can hasten your boat donation process.
Tax deductions can be tricky. Failing to file the correct forms, choose the right type of charity, or follow the IRS rules may mean you can’t receive a deduction at all. Consult the IRS website and seek professional advice if needed so you can ensure that all is in check.
If you’re thinking of donating your boat, consider contributing to Rawhide Youth Services. Your boat donation will assist the continued development of many of our programs, including intensive education and counseling for the at-risk youth in our care. In addition, you may also benefit from a boat donation tax deduction. Our in-house professional support and decades of expertise in processing boat donations will make the process seamless while giving you the best possible experience.
Interested in joining our mission? Donate your boat today and explore other ways to help our cause.