Utilizing a Car Donation Program to Take the Hassle Out of Charitable Giving
To donate a car can be either easy (and even save you money and/or taxes) or you can become entangled in all sorts of problems with car donations. Here’s a list with the most important points to observe to avoid problems later.
The tips and infos about how to best donate tangible goods, especially, cars, boats, RV’s and other vehicles, to a charity or NPO can help you avoid disappointment at the end of a tax period. It’s quite easy to overlook one of the requirements the IRS is asking for, and with even one piece of justification missing, your donation might not be accepted, and you could find yourself in a higher tax bracket than calculated.
A Car Donation Program For Your Old Used Car?
Not everyone has the time to deal with all the intricacies of preparing their car for sale, much less fixing up an old clunker to maximize their sale value. This has historically been the job of a car donation program that is either run by a charity or non-profit organization (NPO).
Sometimes, NPOs use a for-profit third party to facilitate the possession and sale of truck and car donations. Such unscrupulous programs that take advantage of the charities they are advertised to serve have been a less common though persistent problem since modifications were made to the tax code in 2005. However, by carefully checking the details of any car donation program you decide to use, you can guarantee the majority of the proceeds from the sale or donation of your car goes right to the charity you choose instead of middle-men.
Making Sure You Donate To A NPO:
Indeed, though they once represented only about 4% of third-party donation agents that manage car donation programs, some are actually non-profit themselves. You can check on this to make sure by asking for the organizations tax ID number and looking it up on the IRS website.
Using such a car donation program has the advantage of best utilizing the talents of those working for the charity you hope to donate to. Especially now that the actual amount of your deduction is tied to the ultimate use of the automotive donation, it is in the interest of many such organizations to get the most practical use from your donation as possible.
Donation Programs That Teach People How To Repair Old Cars
And let’s be honest, most of the cars given to a car donation program are not in the best of shape, otherwise you’d not be getting rid of the car in the first place. When the car isn’t even running well, the offer of a free tow from your location can be a good motivator. However, in such cases, you might want to shop around to see if there’s a car donation program in your area that specializes in teaching people how to fix up old cars rather than just sell them to the nearest available scrap yard.
Sometimes, donated cars run perfectly well, though you’ve decided to upgrade. This is common enough that many charities are constantly on the lookout for such car donations. Programs that focus on road-worthy cars are often the very same ones that will find a practical use for your donated vehicle that will allow you to take the fair market value of the car for a deduction rather than a somewhat lower (often much lower) sale price that is paid for cars auctioned at wholesale.
Questions To Ask Before you Donate Your Car:
Just because you don’t have time to deal with making the sale of the vehicle yourself doesn’t mean that you don’t want to make sure the charity you choose doesn’t get the highest possible benefit from your donation. As such, you should never be afraid to ask a car donation program to tell you how they plan to use your vehicle. If you don’t like what they have to say, go ahead and keep looking. There are still plenty of charities (and their agents) that are legitimately hoping to maximize your value as well as their own.
Check The Tax Situation Before Donating!
One exception to the usual benefit of car donation programs is a vehicle that has actually appreciated in value over time. Though this is not usually the case, some classic cars are subject to such appreciation. If you’ve had the vehicle for more than one year and it has appreciated during that time, you may be subject to capital gains tax from the sale.
It is best to consult with an accountant to determine if the donation of such a car, whether you conduct the sale yourself and donate cash or allow a car donation program to handle it is the best option for you. Generally, donating the car itself is the best course of action, though again, its use has an impact on the amount you’ll be able to deduct from your taxes.
Car donation programs can take a lot of hassle out of your charitable donation of a vehicle. By following some simple guidelines for choosing the best car donation program for your needs, you can maximize the benefit of your gift all around.