5 simple tips for donating a car for a Tax deduction

You must have heard about the latest trend of people donating their cars to charity organizations. Donating a car has its own benefits. The most important benefit, aside from the fact that you are doing something good for people in need, is that car donation can save you from the Tax deduction as well.

Many people would avoid donating their car just because they feel that the process is complicated or simply don’t have enough information. Most of the time, people just don’t get it that why a charity needs so many cars? Usually, the non-profit organizations who accept cars as a donation don’t always keep the cars with themselves. Often the car is put in the auction to raise money or if the car is in bad shape, it is sold for scrap metal and parts and the money goes to charity. Donated car may also go to a family who may have lost their house or cars in some natural disaster.
In any case, donating a car can really help.



Now that you have a clear picture how car donation can help, here are five simple tips for making the car donation process really simple.
Five useful tips for car donation

  1. First, you have to find out which charities accept car donations. You can also check with your favorite charity to see if they are taking cars as a donation or not. Once you are sure about the charity, investigate further. Even if a charity is accepting car donation, you may not get the Tax deduction. Find a worthy charity. Do your homework before handing over your precious asset to any organization. In order to qualify for the deduction, your car must be given to an IRS approved 501c3 non-profit organization only.

  

  1. Be sure that you are making the right moves. Avoid any middlemen. Many non-profit intermediary organizations will advertise to help you with the car donation process. It is also a good idea to estimate the price of the car you are donating beforehand.
  1. You can call the organization directly or visit their website. They may ask you some information like, who name goes on the tax receipt, what kind of car is it, the year, make, the model of the car, along with other information like mileage or any accident-history of the car. They may also ask for your contact information so they can make arrangements to pick the car from you.

 

  1. Usually, it takes them 2 to 4 working days to complete the process, come and pick up your vehicle. They will ask you to sign the title over directly to the charity. Never leave the title blank. They need your signature to release your ownership of the car. Also, mention the date and make sure that the title of the new owner or buyer section says the name of the charity that you are choosing to donate the car. Never leave this blank.

 

  1. Always remember to keep your receipt from your car donation for a Tax deduction. According to standard rule, if your car’s worth is less than $500 you can claim the full sale price for your Tax Deduction. But if your car’s worth is more than $500, the IRS allows you to claim a Tax Deduction of the actual sale price of the car. If a charity keeps your vehicle for its own use, you can claim the fair market value of the car.

 

 

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