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Taxes and Charity Car Donation

Tax time each year brings a lot of used car owners to consider donating their cars to help with their taxes. Charity organizations that take car donations use these vehicles in different ways; and the direct tax benefit to the owner donating the car might vary based on the structure of that organization. Understanding the benefits of charity car donation might lead some to choose to donate their old cars rather than trying to sell cheap used vehicles.

Basics of Vehicle Donation

Understanding the basics of this concept can really help potential donors make good choices about charity vehicle donation including researching which charities to use and how to write off the donation. Car donation has turned into a big business, with more people donating their cars each year. When donors make good choices they can really benefit financially and lower their tax basis while also helping the charity they have in mind.

First of all, you have to find a charity that actually accepts automobile donations. Working directly with a charity rather than an agency helps the charity keep more of the proceeds, meaning that your donation does a lot more good. Do some research and make sure your charity of choice accepts donations. Find one that does work you admire, and is meaningful to you, in a region of the country or the world that you’re trying to impact.

When you choose a charity to donate the car to, drive it there or arrange for a tow. This keeps costs down for the charity which means they get more benefit out of the transaction. It is also important to use a charity that gets the most use out of the monetary value of the car, and to pick one that is a 501 (c)(3). This ensures that your donation is actually tax deductible.

Determining Value of Donated Cars

To determine the monetary value of the car, use the fair market value. If the car is worth more than $500, the deduction you receive will be determined once the vehicle is sold. The charity you donate it to will send you a receipt of sale and let you know the exact sale price. You will have to complete IRS form 8283 and attach it to your taxes once you complete them and send them in.

The fair market value is significant when the car is sold at a discounted rate to a low income buyer, or when the charity keeps the car rather than selling it. In most cases charities will have detailed instructions for donors to help them do these things right for tax purposes. If the charity you are working with is not helpful in this regard, find a different charity. The IRS pays close attention to these transactions and to resulting deductions on taxes from donors, so you need to make sure you get these things right. Don’t create trouble for yourself in your effort to help out a charitable organization.

Benefits of Donating a Car

There are many great benefits to donating vehicles. Of course there is the obvious benefit of getting some savings on your taxes. But there is also the wonderful bonus of helping someone out in a meaningful way. Many of us don’t have tons of money to donate to charities, so this is a way we can make a difference even as ordinary people. Donating your car to charity is something that can be a great experience for you. Do it right and make sure to do the research beforehand to make sure it’s a great experience.


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