Car Donations - Tax Benefits of Junk Car Donations
So you are thinking about donating your broken down car to a charity. One of the biggest plusses (aside from helping those in need of course) is getting a tax deduction for your generous offer. You may even be eligible to get thee full dollar amount that your vehicle would sell for be it a car, boat, or otherwise. Not only can you get the full value for your vehicle, but the charity you are donating to will as well. A while back you needed to figure out your best guess as to how much your vehicle is worth. This meant tax fraud was easy to go by. When the vehicle finally sold, the profits made from it was much lower than the estimate. The new law allowing you to get the full dollar amount law eliminates the problem and it even gets easier for you.
Once your vehicle is donated you will get a receipt from your transaction that will hold a wealth of information about your donation. This includes a description of the car, name and tax ID number of the charity you are donating to. If your car sells for less than five hundred dollars, this will be your official tax receipt. Now if your car sells for more money, then you will get another receipt that shows the new price. This will have more information that you will need for your tax deduction.
You will be able to get a tax deduction of more than five hundred dollars in one of the following ways. If the car is improved by the charity so that they can sell the vehicle for more cash you will usually be able to deduct the car’s fair market value. If the charity does nothing to the car at all to improve it for sale, the deduction can only be the amount that comes from the final sale.
Remember however that you must get a written acknowledgement from your charity that you are donating to that you must file with your tax return. If you neglect to do this, you will not be able to deduct your donation at all. You need to get this acknowledgement within thirty days from the day that the charity of your choice obtains your donation. You will usually get a temporary receipt when your car is towed but once you notify your charity they will mail you your tax deductible receipt.
If you are unsure in all of this you can always contact your tax advisor who can help you figure out how much your vehicle is worth. But what if you want to donate is not a car? Well than you are in luck as most charities will accept just about any type of vehicle, be it a truck, a bus, an RV, a boat, the options are nearly limitless. Even if your vehicle has not run in ages most charities will take it anyway, unless the car is so old that towing it would cost more than selling it. Otherwise even a vehicle whose engine is no longer running (or any other problems) should be of some use to the charity you choose. That also goes for vehicles that did not pass an emissions test.
There should not be any hassle once your car is picked up. Except for storage fees and fines, once the car is donated any problems that arise will no longer be your responsibility which can be a great relief to you. You do not even necessarily have to be with the vehicle. Many charities will pick up your car without you needing to be there. You will have to leave your keys and your title however.
But what if you no longer have your title? Some charities can still take your car even without a title. It is best to get in touch with the charity of your choice and find out if they can take it if you no longer have a title for the car you are donating. If you do have your title, make sure that you have your name as the seller the same way It appears on the face of the title.
When your car is towed you will not have to worry about any charges to you for the services. All of that will be taken care of by the charity of your choice. They will also set up the time and place for your car to be picked up with you which will also not cost you a dime. It will usually only take a few days for your charity to get your car picked up.
If the vehicle in question was inherited through death, as long as you have a copy of the death certificate that shows you as the proper inheritor, you will still be able to donate it. As for randomly abandoned cars, there are no charities that can accept such things. The care needs to legally belong to you, but that should go without saying.
Once your car is donated you will most likely need to take off the old license plate. Some states require that you keep the plate on the car, however. Some states also need you to release liability too.
Usually it seems that it is a simple thing to do to donate your old car but without proper research you can run into a few problems. If you use an intermediary organization, you want to find out just how much money is actually going to the charity. Some of these middle men will only give charities a flat rate, regardless of how much your vehicle is actually worth. If that is the case, you may not be able to get your sought after tax deduction. You can skip these type of middle men by going straight to the charity of your choice, that way you will be more likely to get a tax deduction and the charity will get more value from your donated vehicle.
Also know that if you want that tax deduction that the charity you have chosen must be approved for such things. Do some research and make sure you know whether or not the charity you picked is okay according to the IRS. Always be sure to get all the paperwork you are going to need. You will need proof that your vehicle is being donated if you want that tax deduction. If you car sells for more than five thousand dollars, you will need extra papers for the appraisal. Just remember that if it is more than five hundred dollars you will need to do a little extra to get your full tax deduction.
If you are feeling extra charitable, you can always deliver your vehicle yourself. That way you will not have to wait for someone to come by and pick it up and you will save you charity of choice a few bucks. You will not have to pay for the vehicle to be towed, but someone has to after all.
So donating your old car (or any old vehicle really) to a charity is a good way to write off some cash when it is time to do the taxes. Not only will it be helping you, but those less fortunate will be making out with your generous donation.