How Does Car Donations Work?

Car Donations  have emerged as one of the significant tax shelters for the donors. Though, the revised federal rules have restricted the tax deduction benefits, still one can make impressive tax deductions through donating a used car.

Car donation is a noble cause since by donating your vehicle you are helping a family in need. Though this is one of the main and most important reasons why people think of donating their car, perhaps another reason would be to obtain a tax deduction. Car donation companies work hard to find vehicles that they can sell to get the most money.

Car Donation Tax Deduction

Donors can claim the amount for which the vehicle sold as a deduction on their itemized tax return. You will be sent a tax receipt with this amount when the vehicle sells at a car auction. Most organizations  have  fast pickup and will also provide free towing for any car no matter what condition, shape, or form the vehicle may be in. Sometimes same day pickup.

Donors with questions about whether a contribution is deductible should call theIRS at 1-800-829-1040. Donors concerned that contributions are being solicited for fraudulent purposes should contact the appropriate state charity official, who is often located in the state attorney generals office.

Below are some frequently asked questions pertaining to  Car Donations and donating cars to charities:

How is the value of my car determined ?The IRS allows you, the taxpayer, to claim a tax deduction of (a) the value of your vehicle up to $500 or (b) if the Car Donation of choice (The Company that you choose to donate your vehicle to) sell the vehicle for more than $500 would mail you a postcard with that value for your tax purposes. 

What do I need to donate my vehicle ?The title to the vehicle would be fine but this may vary from state to state.Also,if you do not have title to the vehicle that you wish to donate,It is possible that other arrangements may be made and of course this would solely rely on  your State laws and the particular Car Donation Organization of choice.

 Is my donation tax deductible ?
Yes. and only if of course the Car Donation Company of choice is classified with the IRS as a non-profit charitable organization.

Donations are tax deductible to the full extent of the law. Individual tax situations vary so please check with a tax professional to determine what if any benefit you may receive.

How will the car be picked up ?

Usually Car Donation Companies will arrange to have your vehicle towed away by a professionally licensed, bonded and insured towing company and this usually will occur in 3-4 business days.

Donating a car can be as simple as 1,2,3 and some of the best advantages when it comes to donating a car is having a opportunity to get rid of a vehicle that may or may not be running so that you may create extra space in your driveway or garage. Also,a tax deduction is always a good thing (smile). Last but certainly not least, having a chance to help others by freely giving and being apart of a good cause in my opinion is the ultimate winner here!