Give Back to the World by Donating Your Used Car to a Charity- Just Make Sure You’re Careful with Tax Deductions

If you’re thinking of avoiding the fuss caused by junking or selling your car, and you’re fed up with the burden of taxes, gifting your used car to a charity might just be the ideal solution to your problem. It would serve the purpose of committing a good deed and help you get rid of the excess tax that you were paying otherwise.

If the vehicle you’re planning on giving up is expensive, make sure to take proper precautions for yourself. While donating such a valuable item, one can unintentionally attract the attention of the Internal Revenue Service and find themselves in trouble.

Here are five essential suggestions you should take into account to reduce the risk for yourself and increase the welfare to charity while planning to donate a vehicle.

1. Make sure to do tons of research about the organization you want to donate to. If it doesn’t have a non-profit status with the Internal Revenue Service, 501(c)(3), that means it is not a non-profit charity organization, which would make your welfare fund tax-deductible.
2. To determine tax write-off for the donation of a vehicle, you have to break down deductions. There are specific rules about the proportion you can lay claim to. There are three circumstances under which the taxpayers can subtract the full market value of the vehicle that they donate- if the charity organization utilizes the car for organizational purposes, sells the car below its market value to provide for a poor person’s needs or, it repairs the vehicle to put on sale.

   

3. Ensure that you ask the charity for a receipt in case they sell the car, so you have a record for yourself. Charities are obliged to provide that legal report within a month of selling the automobile.
4. If the vehicle is street-legal, save your money by driving it yourself to the organization you’re donating it to. This will also help you ensure that you’re handing it down to someone associated with the welfare association. Make sure to sign the car in the charity’s title and get a signature of the organization’s representative as a witness. If someone picks the car up, have his signature on the official document and take a photocopy of it. Many people anxiously await the chance to claim liabilities on donated cars that were not duly signed over to a new master.
5. If you are looking forward to claiming a deduction, snap pictures of the car before and after the repairs. Safely preserve the bills and receipts for the repair and work done.

   

Charities would be more comfortable if people sold their cars themselves, donated the takings, or simply called up organizations they were aware of to find out if they had car donation programs. But, the current reality is that many people wouldn’t even care to donate if it wasn’t their only car.