Should You Give Your Car Away?

You can give your car to charity and deduct the gross proceeds from the sale if the proceeds are for more than $500. If the claimed value of the donated motor vehicle, boat or plane exceeds $500 and the item is sold by the charitable organization, the taxpayer's claimed value is limited to the gross proceeds from the sale. The charitable organization must notify the donor within 30 days of the sale of the amount of the gross proceeds. However, if the charity adds improvements to the vehicle, the charity must notify the donor within 30 days of the contribution. If the charity betters the vehicle then the donor may deduct the vehicle’s market value. Actually, it is much better if the Taxpayer can deduct the vehicle's market value, because there normally is quite a gap between perceived market value and actual proceeds, and this difference can literally be thousands of dollars. One car donation center states that it has processed over 500,000 car donations since 1992, which adds up to about 30,000 cars a year. Did you know that you can also donate boats and RV's? So if aunt Dora dies, and leaves her jalopy in the driveway then maybe this is an attractive way to get rid of the car especially since it does not start anyway. But wait! It is not that easy. Where is the Title to the car? Not in the glove compartment? You may have a problem. You may also have a problem if the title is joint, say Aunt Dora and Uncle Nick. If Aunt Dora died and UncleNick is still alive there will be all kinds of problems. How about vehicle emission controls, was the car equipped with them, were they disabled? When you make a charity car donation: You get free vehicle pick-up whether your car to donate is running or not. In some cases the company will actually put a new battery in the car to get it running again. You avoid confusing Department of Motor Vehicles paperwork or Smog hassles. How it works: Call a reliable Vehicle Donation company. They'll take your information over the telephone, they'll handle all the DMV documents, they'll pick up your vehicle , arrange an auction sale and distribute the proceeds to the charity. If your donated vehicle/vessel sells for under $500 the receipt you receive at the time the vehicle is picked up is all you need for filing your taxes. The actual net proceeds of a donated car seem to range around the $400 figure In all cases, a charity car donation is sold to the highest bidder by a well-established charity vehicle auction. You must have a certificate of title. Some companies will also guarantee that if your donated car gets a ticket after your donation date, they'll take care of the ticket for you and they zealously will fight it so you don't have to worry about it. The reason cars are sold by public auction is that people simply will pay more at an auction for your car than they will pay at a dealer. Also, if the car is running at the time of the auction people will pay more so it is advisable to get it to running condition when reselling it.

Read More

Car Donation Facts For You

Donating money and good is a great way to help out worthy causes while still helping yourself out on your taxes. Car donation is no different. Even though some of the car donation tax laws changed a few years back, this is still a great way to help yourself and others. So if you have an old car and just aren’t quite sure what to do with it, then consider a charitable donation of your vehicle.

As of 2005, the laws for car donation changed. For motor vehicles, boats, and airplanes that are valued at more than $500, things are a bit different than before. The allowable amount of the deduction is now limited to whatever amount the charity sells it for. The charity to which your car donation is made is required to provide you with written acknowledgement of your donation within 30 days of you making it. If the charity provides any false or exaggerated acknowledgement, they can be penalized.

As of the first of January in 2005, when you make a car donation, the tax write off is based on how the charity uses your donated car. If it is sold, you can deduct the gross sale price. If, on the other hand, the charity uses the car for what the new law calls “significant” tax-approved work of charity, you would be able to claim the market value of the vehicle. Again, however, there are stiff penalties for falsified documents.

Some of the charities, despite acknowledging that the old laws had problems, are skeptical of the new car donation laws. Many of these organizations are concerned about what will happen when the tax deduction responsibility is put in the hands of the charities rather than the donors. A group of them actually sent a letter to the Treasury Secretary suggesting that people may be discouraged from donating when they are unaware of their deduction amount. Not being able to weigh the cost to the benefit of donation may discourage some auto donations.

If you do choose to make a car donation, you will find that the process is very easy. Most charities that offer to take your vehicle will have information on line or via phone about it. In many cases, in fact, you can fill out the appropriate forms on line to get the process underway. You also will likely not even have to be home and the vehicle may not even need to be in working condition. Many charities will come and toe your car away if you can simply leave the title under a floor mat along with the key and put it somewhere accessible. As soon as the car is sold, you will receive a document in the mail letting you know how much you can write off of your taxes, legally.

Since many charities rely on donations of all sorts: clothing, cars, money, and even appliances, think about what you are doing when you make an auto donation. By donating your vehicle, you are helping out a worthy cause of your choice. In addition, you are helping yourself out. Sure, the tax laws have changed, but you can still benefit from your donation. The car doesn’t have to run to be eligible, so your write off might still be more than selling it for junk. So feel good about yourself, help your tax line, and get rid of that old junker by donating your car.

Read More