If you have a car you want to get rid of, donating it to a charity may be an option you’d like to consider. How difficult is it? Well, after you track down a charity that accepts cars your job is pretty much done. Depending on your purpose for donating the car, it could end here or continue on with an arduous process. Simply donating it means the charity you’ve chosen will come out and tow your car away for you. If you’re looking for something like a tax deduction, it gets a bit more complicated.
This site, Car Donation Wizard, has a comprehensive list of charities that accept car donations. It’s a fast and easy process that’s all online, and only takes a few minutes. All you need is some vehicle information including year, make and model, the mileage and license plate number.
First, before you donate, make sure the charity is approved by the IRS as tax-exempt, which you can check online here.
Then when you go to fill out your tax return, understand that because the donation will count towards income, you will only be able to deduct your tax bracket percentage from how much the car was worth. In other words, if you’re in the 25% bracket and sell a car for $1,000, you will only get $250 back.
To really get the full benefits of donating a car as a tax deduction, you must add it to a list of deductions at the end of the year. If the list totals more than the standard annual deduction, then you will see the full monetary benefit of donating a car to charity, according to tax expert Twila D. Midwood's article on Edmunds.
How does the IRS determine how much your car is worth? The IRS goes by market value, which is how much a person on average is willing to pay for your car, and it needs to be measured to your car’s condition exactly, and it needs to qualify in order to sell. Qualify in this instance means the charity either wants to use the car for itself, the charity intends to fix whatever is preventing the car from running, or the charity gives the car to a family.
Apparently, not many donated cars are in good enough condition to meet any of this criteria, so take good care of your car. The better condition it’s in, the more likely it’ll be classified as in good or excellent condition, which means the car would be worth more. One way to get a good idea of what the fair market value is of your car is to use the appraisal tool on Edmunds. No matter how you donate your old car to charity, make sure the organization is legitimate and that the right people get the car.
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