Over the past decade, I’ve had the pleasure of donating three cars to charity, choosing to avoid trading them in or dealing with strangers who might be interested in buying my cars. I could have received anywhere from $500 to $2000 for these vehicles, but I knew that a particular charity that I wanted to support could benefit by reselling them and use those funds for kidney disease research.
Donating a late model car to charity can be a smart move, one that can financially benefit a needy organization as well as yourself. However, is donating a car always the right move? From a financial standpoint that answer would be “no,” but it does have its advantages. Please keep reading and we’ll examine why donating your car can be one of the best decisions you’ll ever make.
Qualifying Charities – Though some charities may accept car donations, in order for you to reap a tax deduction on your federal tax return, you should donate only to those organizations which are 501(c)(3) recognized under the federal tax code. If they are, then you’ll be able to claim the amount that the charity sold the car for. Please remember your donation will go to the charity, but they’ll most likely resell your car and keep the proceeds. Once the sale has been completed, you’ll receive a receipt from the charity telling you how much the car was sold for at auction. Use that amount to claim your deduction per IRS guidelines.
Direct Donation – Regardless of the value of your vehicle, you’ll want to donate it directly to the charity, if possible. This means that if your car is in good running order, you must drive it to the charity’s office, sign paperwork to re-title the car, and you’re done. When dealing with a third party, that company must be hired by the charity to pick up your car and they’ll charge them a fee to remove your vehicle. Instead, why not make your donation work to its fullest by taking it to the charity yourself?
No Hassles – Trading your car in when buying a new one or selling it separately to a stranger can be a hassle. Especially holding true for an older car, the amount of money you’ll get when trading it in will be far less than what the car is actually worth.
Your Good Deed – Of course, one of the most important reasons for donating your car is that you can do some good. Funds received from the sale of your vehicle can help someone pay for their cancer, help a civic group build a playground, enable a deaf person to pay for hearing aids, etc. You won’t ever know the exact manner in which the funds were used, but you will know that through donating your car much good came out of it.
Finally, do an online search to find charities in your area who can benefit from a car donation. When you find one that appeals to you, contact them to find out what steps you can take to ensure that your gift is best used. You can make a difference in someone’s life and receive a tax deduction for your generosity.
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