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Thank you for your interest in Charity Navigator and Informed Giving. As seen on. Well, if you have a junker, it's probably not going to give you much of a tax deduction. On the other hand, if you have car that can be used by the charity, the donation could be significant. If you have a car in decent working condition, by donating it you will:. Help a charity whose work you believe in: Maybe that seems obvious most of us make donations to charities whose work we support , but it's true.
Provide a vehicle for the charity to use: As long as your car is usable, many charities can make good use of it: delivering meals to the elderly, taking people to doctors, or anything else that furthers the charitable mission. Some of your best choices for charities that actually use donated cars for their activities include the United Way, Goodwill, and the Salvation Army.
Get a healthy tax write-off: The rules are strict since the law changed in , and the process more complicated, but a deduction approaching fair market value can still be had. If the car is going to be used by the charity in its programs, then you will get written certification of its intended use and planned time of use.
The charity must not sell or exchange the vehicle before the planned time of intended use. Avoid the hassles of selling the car yourself: You won't need to pay for newspaper ads. Nor will you deal with phone calls or emails—or have to show the car to potential buyers and haggle over the sales price.
Free pick-up: Many charities that accept cars will collect and tow them away for free. But you do need to realize the charity will deduct this cost from the car's value, which will reduce your tax deduction.
Of course, if towing amounts to a significant percentage of the car's worth, you can always drive it in yourself. Get rid of a car that does not have proper title: Some charities will take a car for which you cannot find the title. They probably will only be able to sell it for scrap or parts, reducing the value of your deduction, but at least you can get it out of your driveway and can avoid the expense of replacing that title.
Non-cash donations are a common trigger for IRS audits. So, after you make your generous contribution, make sure you carefully document the transaction and keep the documents in your IRS tax file for that year in case your accountant or tax preparer needs it.
You also want to make sure the charity you select is a qualified organization. You can check the list of qualified organizations at this IRS website. Donating a car to charity can be a win-win for you and the charity, provided the donation meets the provisions of the law.
Remember, the most beneficial donation involves a car that can be used by the charity or—if transportation for the underprivileged is part of the charity's mission—sold directly to a person who will drive it: Only then and with the proper documentation can you take a figure near the car's blue book value. United Way of Rockland County. Goodwill Vehicle Donations. Salvation Army. Internal Revenue Service. Accessed Feb. Pick efficient charities to give to.
There are multiple organizations such as CharityWatch that evaluate charities and rate them for efficiency in supporting their causes. To take a tax deduction for a car donation, you have to itemize deductions on your return.
There are detailed rules about the amount you can claim. Taxpayers can deduct the full market value of a donated car under three circumstances: The charity uses the car in its operations; it materially improves the vehicle to sell or use it; or the charity donates or sells it to a needy person for below market value.
Otherwise, you can only deduct what the charity receives as proceeds from selling the car. Get a receipt. Make sure to get a receipt from the charity for the vehicle and eventually a document certifying how much the vehicle was sold for. Charities are required to provide that document within 30 days of selling the car. Don't forget IRS form Drop it off. If the car is road-worthy, drive it yourself to the charity you're donating to.
It saves money and ensures you're not giving the car to some unrelated, for-profit intermediary. Make sure to sign over the title of the car to the organization and that a representative signs it, as well. If someone is picking the car up, have them sign the title and take a photocopy of it. People have been on the hook for liabilities on donated cars that were not properly signed over to a new owner.
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