If you’ve been thinking about donating a car for a tax deduction and not sure how to go about it, here are some tips you should know. You want to be able to donate the car, truck, RV, boat, motorcycle or other vehicle and get the best tax write-off while helping a charity do its work.
You’ll see many places advertise with big “Donate Your Car” headlines. But, oftentimes you may have never heard of the charity or organization. Some may be smaller charities, and many times you’ll find they are intermediaries who handle donated cars for charities.
If you go through one of the intermediary car donation organizations, they’ll be taking a sizable amount for profit and it could be as much as 50% to 90%. They may handle a lot of the details the charity isn’t set up to do but this needs to be checked out. So if you’re interest is in giving the charity the most amount of profit it’s better to go direct through a charity. If this doesn’t matter to you then you may want to go through an intermediary and their car donation program.
Some charities keep the car for transporting people and goods on occasion. Some charities put them on their used car sales lots and sell them much the way used car dealers do. Then some charities give the car to a needy person who would be without transportation if they didn’t have the car and may need to get a job etc.
So once you decide on whether you want to go through a charity car intermediary or through the charity, it will simplify matters. If you decide to donate direct to a charity, you may want to pick a well-known charity, a name you recognize.
In any case, you’ll want to pick someone local so your car can be picked up or you can deliver it if it’s running. Some charities require that it be running in order to accept it. Call the charity and find out what their requirements are – what they intend to do with the vehicle and what paperwork they will do and what is expected of you. The charities differ a bit on what they require, etc.
You can get a good tax deduction when you donate your car and that should be explored next. Newer laws have helped give people who donate cars to charities, get higher tax deductions. This can add up and help considerably on your federal income tax return.