Top 10 Tips to Donating your Car
Here are the top 10 tips before you donate one of your biggest assets to a charity
- Avoid the middlemen, this will increase the percentage that actually goes to the charity. There are many for-profit intermediary organizations that advertise aggressively and offers to help you donate your car to charity. These for-profit companies typically keep about 50% to 90% of the car’s value. This means only 10% to 90% goes to the actual charity. Check directly with the charity that you admire and find out from them directly if they accept car donations. They will usually provide information on how this is done.
- Do your research, and find a worthy charity. If the charity you admire are not equipped to accept your car donation, do some research and find a great charity. You can research the charities’ track records BBB.org (Better Business Bureau) or Charitynavigator.com.
- Find out your charity’s cut, if you use an intermediary organization. Just ask the organization how much of the car’s value will go to your charity. Most organization do it as a flat fee, i.e. $100 per used vehicle regardless of its value.
- Know the tax status of your charity. In order for you to get a tax deduction, the charity you donate to must be an IRS-approved 501(c)(3) organization.
- Deliver the vehicle yourself if you can. There is always a charge to the charity for someone to pick up your car. So you can maximize the benefit to your charity if you deliver it yourself, of course if your car does not run, that is a different story.
- Transfer your car title with care. You need to formally re-title your car to the charity. Report the transfer to your state’s DMV or licensing. Never leave the ownership space on the donation papers blank.
- Get the correct tax deduction of your car. The standard tax deduction is $500. If it is worth more, the IRS is going to require evidence of how much the charity got for it. So you will need a receipt from the charity revealing how much they sold the car for.
- Know the fair market value of your donated car. This can easily be found on KBB.com (Kelley Blue Book).
- Organize your paper work. If you car donation is greater than $500, you will need an IRS Form 8283 with your tax return. If your car donation is greater than $5,000, your tax return must include an outside appraisal.
- Details, Details, Details. This will make a difference on your tax turns so take the time to dot the i’s and cross the t’s to ensure that the charity of your choice gets the most benefit and you get the biggest possible tax return for your car donation.
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