Getting rid of an old car can seem difficult. If it’s not in the best shape, you may be reluctant to sell it to someone because you’re concerned it may break down and they’ll come back to you complaining. Of course, you probably don’t want to pay someone to just haul it away.
Another option is to donate the vehicle to a charity in exchange for a deduction on your taxes. The following tips can also help:
1. Make sure your charity has 501(c)(3) status. If your intended charity doesn’t have this type of status, your donation will most likely not be tax deductible.
2. Make sure the charity accepts vehicle donations directly. Many charities use companies that act as middlemen in the process. In these situations, the companies keep a percentage of the donation as payment for their role. Sometimes their cut is quite high, so do your homework before deciding on a charity.
3. Drive your car to the charity as opposed to having them pick it up. Hiring a service or a tow truck to claim the donation will cut into the amount of money your charity ultimately receives.
4. Understand how your deduction is valued. Discuss with the charity how much your vehicle is worth and how much you can deduct from your taxes – and make sure the charity is aware of and abides by the law when assigning value.
5. Sign over your car to the charity. If a charity asks you not to assign ownership, you should go elsewhere. The problem is that if you do not transfer the title, the car is legally still yours. Think about the liability issue this presents.
6. Get a receipt after the car is sold. It’s a worthy point that requires no explanation
There are several rules you must follow in order to be able to successfully take this deduction so be sure to contact the office before making that donation.
Tags: donation of a car
Written by: Doug Rodrigues