Checklist for Your Next Car Donation
You've probably seen ads on television soliciting car donations for charities. Giving your car to charity provides many benefits for both the charity and its clients - and for you. The charity gets a valuable asset, which they can either use, or sell to benefit their programs. You get a deduction on your tax return that could be equal to the current market value of the car, or the amount that the charity receives when they sell the car. Depending on the car, that could actually be worth more than the amount a car dealer will give you on it as a trade-in, and it's almost certainly more than a scrap dealer will give you for the metal.
If you do decide to donate your car to a charity, it's important for you to do some research and to keep meticulous records to ensure that you and the charity get the full value of your donation. Here's a checklist of things you should know and do before you donate your car.
Know the Charity
Many charities no longer accept direct vehicle donations because they don't have the resources to take full advantage of them. Some larger charities accept direct donations and have an entire department devoted to dealing with the paperwork and other requirements. Many other charities accept car donations through third-party donation centers that serve as clearinghouses. Before you donate your car, check to make sure that the charity is a 501 (c) 3 qualified charity. If it's not a 501 (c) 3 organization, you won't be able to deduct your donation from your taxes.
Transfer the Title of the Car to the Charity and Keep a Copy of the Transfer Papers for Your Records
Some less-than-reputable companies will ask you to let them handle the details of the transfer of title. This can be easier for the charity, which never actually takes possession of the car. They don't actually transfer the title until the car is sold to another party, but this can cause problems for you when you file your taxes. Instead, see to it that the title of the car is transferred to the charity so that you'll have a record of the donation.
Ask the Charity How They'll Benefit From Your Donation
Charities use donated cars in several different ways, and there are differences in the tax treatment among the ways. It's important for you to know whether the charity will use the car itself, donate it to a needy family or sell the car at auction. It's also important for you to know if the charity will make substantial repairs to the car before selling it. Again, there are differences in tax treatment.
Take Photos of the Car and Get an Appraisal of its Value if the Car is Worth More Than $5,000
Before you make a donation, establish its value. If it's worth more than $5,000, you should get a professional appraisal to be sure you'll be able to deduct the most value from your taxes. If its value is less than $5,000, you can usually establish its value by checking Kelly Blue Book or current, local classified ads for similar vehicles in similar condition.
Once you've assured yourself that the charity is legitimate and that you know the approximate value of your car, call a charity that accepts car donations and learn about their process.
About the Author
Chris Robertson is an author of Majon International, one of the world's MOST popular
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