Donating a car can be a smart move, one that helps a worthwhile charity while providing an important tax deduction for your income tax return. There are a number of worthy charities to consider when donating your car, but instead of telling you who should get your car there are certain things to keep in mind when making your decision.
Guidelines
The IRS has established guidelines on how to handle the sale of your car, making changes in recent years. One important change involves declaring the actual selling price of the vehicle instead of its fair market value.
Yes, where donors used to be able to declare what they thought was an accurate price for their vehicle, you have to wait until the charity resells the vehicle before determining what amount you can claim on your income taxes.
Exception
You may still be able to deduct the higher full market value for your car if the charity decides to keep the car and use it for its own operation or provides it directly to someone who is economically disadvantaged.
Verify what the charity plans on doing with your vehicle once you turn it over to them.
Tax Exempt
In order to realize a tax deduction, the charity must be 501(c)(3) under the Internal Revenue Code. You will receive a written acknowledgment from the charity once your car has been sold.
If you donate your vehicle to someone other than a nonprofit, then you won't be able to enjoy an important tax break.
Sell It
You may be able to get a better price for your car by selling it privately and donating those funds directly to the charity.
It can take a lot of work to sell your car privately, but if you do so and donate the proceeds of that sale to a favorite charity, you'll garner more for the car than if it was sold at auction.
Appraisal
According to Charity Watch, "If the car is worth $5,000 or more, an independent appraisal is necessary." Make sure that you have a good idea what your car is worth before donating it. Visit to find out its book value.
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