Car Donation Tax Deduction - A Donor's Guide to Car Donation and Tax Deduction

Donate My Car or Sell It to a Junkyard for Cash,Which is better?

Do you have an old junk car (working or non-working) that you want to get rid of? What are your options? Here are two options, either donate your car or sell it to a junkyard for cash. To help you decide, which is the better option, we have listed out the pros and cons of donating an old junk car or selling it.

Donate Your Car

Donating a old junk are usually valued between $200 to $500 when donated to a charity.

The Pros of Car Donation:

  • Free Junk Removal - The charity will typically come and pick up the car free of charge.
  • Helps a Cause - Each charity has a specific cause that the donation will help raise funds for
  • Tax Deduction - This is the financial benefit to you, where you will receive a tax deduction of $500 or more. If your car generates proceeds in the amount of under $500, you will receive a $500 tax write off. If your car donation generates proceeds in excess of $500, your tax deduction will directly reflect the amount of proceeds generated.

The Cons of Car Donation: There aren't many negatives to car donations.

 

Sell Your Car to a Junkyard

Selling your car to a junkyard get you cash instead of a tax deduction.

The Pros of Selling a Car to a Junkyard:

  • Free Junk Removal - The junkyard will typically come and pick up the car free of charge.
  • Cash Payment - If you do sell your car to a junkyard, you can negotiate a portion or all of it to be paid in cash

The Cons of Selling a Car to a Junkyard: There aren't many negatives. Some might argue that it might not help a cause but charity can be given in many other ways than just a car donation.

Here are 5 easy steps to donate your car to a junkyard for cash.

  1. Get your paperwork in order. Here is the following information you will need: your car title and your car insurance information. In addition, if any parts of your car aren’t working, list it on a paper. You will need this information to give to the junkyards that you call in order to get a fair amount for your car.
  2. Find the market price for your car. This can be easily done by calling several junkyards and find out what they would offer you. Also find out if they will tow the car for you if it is not drivable or if you will need to contact a tow truck to do this. Note all these should factor into your decision to sell your car to a junkyard for cash or to donate it for a tax deduction.
  3. Negotiate the price. Find the top three bids and then see if you can get at least one to go a little higher than what they first quoted you.
  4. Close the deal. Accept the highest bid and then make arrangements to get your car to the junkyard. If the car is not drivable make towing arrangements with the junkyard or with a third-party towing company to pick up the car and deliver it to the junkyard. In most cases if you can drop off the car yourself, you can get a check right then. When using the towing option you will have to wait for a check to come in the mail.
  5. Ensure you have all the paperwork. Make sure there is a legal transfer of the title to your car to the junkyard. Get a bill of sale at the time of the transfer of the title.