Are you looking for some good reasons to donate your car to a charity? If yes, then this article is absolutely perfect for you. Donating a car to a charity was a common tax strategy before 2004.
Therefore, people accepted tax deductions worth thousands of dollars. Congress stopped this with the American Job Creation Act of 2004.
This Act limits the deduction taken for donated cars, trucks, boats, or planes worth more than $ 500.
Besides, the Act did not allow taxpayers to deduct the value published fair market of the vehicle.
Instead, it required that the amount earned should be for Charity. It was documented with a donor charity receipt.
Generally, at auctions and charity auctions, cars typically sell for as low as $ 30 to $ 50. It’s no wonder that donating an old car has suddenly become less popular.
Is it still worth donating a car? If you are an addict, you won’t get much of a tax deduction. On the other hand, if you have a charity car, the donation could be significant.
Top 6 Reasons to Donate your Car to a Charity
1. Supporting should be the best reasons to donate your car to a charity
It may seem obvious, but it is true. Most people donate to charities that support their work. Generally, this is one of the best reasons to donate your car to a charity.
2. Gift a car to the charity should be the best reasons to donate your car to a charity
Many charities can make use of your car as long as they can use it. They can deliver meals to the elderly or take people to the doctor.
The Salvation Army, Goodwill, and the United Way are some of the best charities donating cars.234 Think of local community colleges or vocational schools.
Their educational programs use donated cars as a way to train mechanics.
3. Get a healthy tax write-off
Although the rules are stricter since the 2004 law change, the process is still possible to deduct fair market value.
Suppose you are giving away a car worth more than $ 500 and sold by a charity. In that case, you will need to get a notice from the charity stating that the transaction was “arm’s length unrelated” and gross proceeds.
However, the charity will give you written confirmation of the vehicle’s intended use and the plan they will use it.
Meanwhile, the charity cannot sell or trade the vehicle before the scheduled time. You must obtain an independent appraisal if the vehicle value is more than $ 5,000.
If the car’s value exceeds $ 500, you will need to file IRS Form 8283 attach the following documents to your return.
Generally, it is good to attach the Form if the car is worth more than $ 5,000 8283 and the independent appraisal. 5
4. You don’t have to sell the car yourself.
The most important part is, you don’t need to place any advertisements to sell the car yourself. You won’t even have to deal with phone calls or emails, nor will you have to show the car and negotiate the price.
In such a case, Charity will come forward and discuss donating your car to their charity with you.
5. Pickup is free
Many charities that accept cars will tow or pick them up at no cost. However, you should know that the charity will subtract this cost from the value of your vehicle.
It will reduce your tax deduction. If the trailer exceeds a substantial portion of the car’s value, you can still drive it yourself.
6. You can get rid of any car without a title
Some charities will accept a car that you cannot find. Title You can sell it as scrap or parts. You will not be able to recover it as scrap or parts. However, you will still have it in your driveway.
How to donate your car?
It’s easy to donate your car just by contacting a charity to have it picked up. Many larger charities, like Habitat for Humanity and Goodwill, offer dedicated car donation services.
These include hotlines and websites that allow you to complete donation forms.
There are even dedicated car donation services, like Charitable Adult Rides & Services. Moreover, they handle all the details and lets you choose the charity you want the proceeds to go to.
You can also sell your car and donate the proceeds to charity if you’re willing to do a little more.
Sometimes this can be more advantageous to charities than selling the car at auction. Of course, it’s up to you.
Pre-Caution Before Donating A Car
However, I am sharing some steps to help you stay safe while donating your car.
Generally, it is safe to donate your car to charities. But you should still ensure your safety and avoid any liability to your vehicle once you’ve gifted it.
- Avoid organizations that promise too much.
- Receive a receipt from your charity
- Once you’ve finished driving your car, remove your license plates.
- To transfer your title to your state motor vehicle agency or transportation department, you must submit a transfer form.
Non-monetary donations are a common trigger for IRS audits. After making your generous donation, be sure to document it carefully and keep copies in your IRS tax file for the year.
Also, familiarize yourself with the IRS publication “A Donor’s Guide to Donating Vehicles.” It will be helpful for your accountant or tax advisor. It will ensure that you are following all the rules.
Also, you want to make sure that the charity you choose is qualified. You can check the list of eligible organizations on this Forbes website.
If the car donation follows the 2004 law, it can be a win-win situation for you and the charity.
Do not forget that the best donation is the one that can be used directly by the recipient, only then.
Therefore, with the correct documentation, will you be able to carry a figure along with the blue book value of the car.