A car donation is an easy way to get rid of your old car than trying to trade it in or sell it yourself. You have no advertising costs, and no extra phone bills. Nor are you waiting day after day to get your old car moved from your garage, and you don’t have to stay at home waiting for callers or potential buyers visiting to have a look at the vehicle.
Although these may seem spurious reasons for car donation at first glance, many people trying to sell their old cars report an increasing sense of frustration as time goes by and they still haven’t found a buyer. Some end up trying to sell it for scrap and find it costs them money to have it towed away.
This is not the case when you donate a car to charity. The whole process can be over within 48 hours without it costing you a cent, and you even get it taken it away free.
Tax Deductions for Donating a Car to Charity
You will likely be eligible for a tax deduction if you donate a car to charity. The charity must be registered, and full details of what is required and how much you can claim are detailed in IRS Publication 4303. In many cases, you can get more money back in tax than the financial benefits of trying to sell the car yourself when you take advertising and insurance costs into consideration.
Basically, if the charity sells the car then you can claim the gross amount of the sale in your tax return. If the charity decides to use the car or repair/improve it before using it, you can claim the fair market value of the car when donated – before the improvement. The same is true if the charity improves then sells the car – you can receive the fair market value of the vehicle when donated.
Everything you need to know about the procedures required when claiming tax for a donated vehicle is detailed in the above IRS Publication. The charity you choose will also give you advice and help regarding this.
Promotional Benefits for Donating a Car to Charity
Some charities will offer a non-cash benefit for donating your car. These are generally promotional benefits that do not cost the charity money, but are used by businesses such as hotel chains and travel firms to promote their business.
Among such offerings are travel vouchers that allow you free travel or travel at discount prices and vacation vouchers. These can offer you free hotel weekends, free cruises or other types of vacation. You may also be offered store discount vouchers – all of which are useful if you are able to use them.
Not all charities can offer such reward for donating your car, but that doesn’t mean you should not use them. Some may have a commitment that appeals to you, while others may spend all their income on the charity and less on advertising and staff. You should be able to establish these figure if you have a need to, and simply asking them is usually sufficient.
Recap of Benefits
To recap, then, the main benefits you enjoy when you donate a car to charity are:
- Tax benefits: you can reclaim the value of your car or the selling price in your tax return
- Simplicity: you can be rid of your old car free of charge without having to sell it or keep it taxed or insured.
- Save time: you will avoid advertising costs and save time in having your old car taken away. You don’t have to wait at home for telephone calls or visits from potential buyers.
- Free towing: you don’t have to pay to have your old car towed away.
- No bureaucracy: save on the Department of Motor Vehicles paperwork needed if you transferred the car yourself. All that is taken care of for you.
- Feel Good: you will feel good when you donate a car to charity – it is better to give than to receive.
- Helping Charity: you will be helping the charity to do its work, whether it can use your car in its work or sell it to raise finance.
--> Next: Charity Car Auction
