6 Reasons to Donate Your Car to Charity

        Just before 2004, donating a car to charity was a popular tax gambit. Persons would take thousands of dollars worth of duty deductions (no matter what the vehicle ended up attractive for the charity at a sale or auction). Congress put a stop to this by completing the American Jobs Creation Act of 2004, decreasing the deduction one could take for a given car, truck, boat or plane worth more than $500. Instead of permitting taxpayers simply deduct the published fair market value of the automobile, as before, the Act decreed the deduction be determined by the exact amount the auto actually garnered for the charity - and noted by a receipt from the charity to the donor.

Cars often go for rock-bottom prices - $30 to $50 - at charity sales and auctions. Not surprisingly, giving that old auto all of a sudden became less popular.

Thus, is a car charité still worth it? Very well, if you have a junker, it's probably not going to offer you much of a tax deduction. However, if you have car that can be employed by the charity, the charité could be significant. (For a backgrounder, see Deducting Your Donations).


Why Give

If you have an auto in decent working condition, by donating it you will:

1. Help a charity whose work you feel in. Maybe that seems clear (most of all of us make donations to charitable groups whose work we support), but it's true.

2. Give a vehicle for the charity to use. Just as long as your car is useable, many charitable groups can make good use of it: delivering dishes to the elderly, taking individuals to doctors, or nearly anything else that furthers the charitable mission. Some of your best choices for charities that actually use donated cars for their activities include the Usa Way, Goodwill and the Salvation Army. On the local level, think about community colleges and business schools; their education programs use donated cars to train mechanics.

3. Acquire a healthy tax write-off. The rules are stringent because the law changed in 2004, and the process more complicated, but a deduction approaching fair market value can still be had. If you give money a car valued over $500, and the charity sells it, you must get a written-notice from the charity stating that it was "sold in an arm's length deal between unrelated parties" and the gross proceeds of the sale. In case the car is going to be employed by the charity in its programs, then you will get written documentation of its intended use and planned time of use. The charity must not sell or exchange the vehicle before the planned time of planned use. In case the car is worth more than $5, 000, you must also get an independent evaluation stating so. If the car is worth more than $500, you will need arranging IRS Kind 8283 and attach to your return. In case the car is worth more than $5, 000, in combination with Form 8283, it might be smart to include the independent appraisal and the charity's recognition with your return as well.

4. Avoid the headaches of selling the car yourself. You'll not need to pay for newspaper advertisements. Nor will you offer with phone calls or emails - or have to show the car to potential buyers and haggle above the sales price.

5. Free pick-up. A large number of charities that accept automobiles will acquire and tow line them away for free. But you do need to realize the charity will deduct this cost from the car's value, which will decrease your taxes deduction. Of course, if towing amounts to a tremendous percentage of the car's worth, you can always drive it in yourself.

6. Remove a car that does not have proper title. Some charitable organizations is going to take a car for which you cannot find the title. They probably will be able to sell it for tidbit or parts, reducing the cost of your deduction, but at least you can obtain it out of your front yard and can avoid the expense of replacing that title.

The Bottom Collection

Non-cash donations are a common trigger for INTERNAL REVENUE SERVICE audits. So, after you choose your generous contribution, be sure to carefully document the deal and maintain the documents in your IRS taxes file for that 12 months in case your documentalist or tax preparer needs it. Also familiarize yourself with the IRS' newsletter "A Donor's Tips for Vehicle Donation. " Doing this you can make certain you are following all the guidelines.


You also want to make certain the charity you choose is an experienced organization. You can check the set 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 complies with the provisions of the 2004 law. Remember, the very best donation involves a car which can be employed by the charity or - if transport for the underprivileged is area of the charity's mission - sold directly to a person who will drive it: Only then (and with the proper documentation) is it possible to take a shape nearby the car's blue publication value.