There are a number of benefits that you gain when you donate cars to US charity auto auctions. It can provide a financial, tax related, benefit to you. Depending on your car, this can actually be more than your car would sell for. Plus, you get to go to bed with that warm fuzzy feeling that comes from helping out and raising money for a good cause. However, if you decide to do this, it is important that you know how to get the maximum benefit from your donation.
Is Your Car “Donation Worthy”
In most cases, a charity will take any car that they can profit from. They will normally determine this by subtracting towing costs (if there are any) from the projected sale price. In many cases, they will accept cars that don't run, have missing parts, or have any other problems, as long as they conclude from their evaluation that they will make a profit after the towing expense.
Checking the Charity
If you are donating a car and plan on writing it off during tax season, then you need to make sure that you will be able to do this. The most important step that you can take to protect yourself is to only donate cars to charities that are considered to be a “qualified, eligible, 501(c)3 registered charity”. If the charity that you plan on donating your car to doesn't fit this criteria, then there is a chance that you will not be able to take the tax deduction that you expected. The easiest way to check this out is to go to the IRS website and search “Publication 78”, which is an annual list of charities that have been qualified to accept a donation and will enable you to claim the deduction.
How Much Can You Deduct
A lot of people will either over-deduct or under-deduct that value of the car that they donated. You will only be able to deduct the fair market value of your vehicle. Essentially, this is the amount that you would get form selling it, in its current condition. There are a number of different regional guides that you can use to find out what your car is worth.
- Keep in mind that if your car is valued at more than $5000, then you will need to get a written outside appraisal. This is the only way that they IRS will accept your claim.
- If your car is worth more than $500, then you will need to attach “Form 8283” on your tax form.
- Keeping Records – You need to make sure that you keep a copy of the title transfer papers. Not only will it be useful for tax purposes, but it will also ensure that you don't get hit with a parking ticket or speeding ticket that was given to your car after you donated it. Charities have accidents too, so make sure that your donated car is under their name.
If you want to donate cars to US charity auto auctions, then it is important that you make sure that the car is donation worthy, you are donating to a qualified charity, and protecting yourself from problems later on by keeping the proper paperwork.