So you’ve got an old car or truck that you don’t need anymore and you really don’t think it’d be worth too much on the market or for trade-in. Many people in that same situation are turning to charitable organizations and donating their vehicles. Donations usually result in a pretty nice tax deduction, but it’s not all as easy as it seems. You have to be very careful to make sure you do everything by the book so you don’t have the IRS knocking down your door. There are also a number of places out there looking to make a quick buck through the donation process. If you follow these simple guidelines, your car donation is sure to go much more smoothly.
First, you must decide exactly how you want to donate your vehicle. A lot of car donation businesses have popped up over the years that claim to sell your vehicle for charity. Some of these places only give certain predetermined amounts per car to a charity rather than the entire profit of the sale. You may be ineligible for a tax deduction depending on the procedures of the particular company. If the vehicle is sold for $ 2500 and $ 500 goes to an actual charity, chances are your deduction will only be $ 500. The fact is that sometimes these donated car brokers can be dishonest. They have to disclose all of their information to you if you ask, so be diligent if you decide to go this route.
Another option is to donate your vehicle directly to a charity for resale or use. This is the best way to truly know where your car is going and who is benefiting from it. You must first determine if the charity is a true non-profit organization. Only donations to non-profits qualify for the tax deduction. If the charity decides to just sell the vehicle, you’ll be eligible for a deduction equal to the amount of the sale.
Some charities, particularly church organizations, may decide to use the car rather than sell it. In this case, you’d be able to claim the Kelly Blue Book value as a deduction on your taxes.
Car donation is becoming increasingly popular. If you no longer have use for a vehicle, giving it to a charitable cause can be both rewarding and beneficial to you. Just beware of possible scams that are out there and make sure everything is well documented. Be sure to get the title transferred immediately after finalizing your donation.