One of the best ways to give to charity is to donate your car. The main reason for this is that you get a nice tax deduction and you avoid the hassle of having to sell your old car. While there are advantages to this there are also a few issues that you are going to have to be aware of if you plan to donate a car to charity.
The first thing that you are going to want to do before you donate your car is to decide who to donate it to. This is an important decision since it will affect how much of a deduction you get for your car. The days when the charity would assess the value of your car and give you a tax receipt are long gone, there was too much room for fraud. The amount that you get is going to depend in large part on what the charity does with the car that you donate. Therefore it is important to find out ahead of time what they are going to do with your car.
In some cases when you donate your car to charity they will use that car for charitable purposes. For example charities that deliver meals may need a car to make the deliveries with. In this case you will receive the Blue Book value for your car. If that value is more than five thousand dollars you will have to get the car appraised before you donate it. This is done to reduce the likelihood of fraud.
The far more common use of cars that are donated to charity is that they are sold and the money is used for by the charity. Depending on the condition of the car it may be sold to a customer who intends to drive it or it may be sold for scrap. Regardless of how the car is sold the amount that the charity sells it for is the amount that you will get for your tax deduction. It is therefore important to make sure that you choose the charity that will get the highest value for your car. One of the advantages of charity car donation is that the charity can usually get a higher price for your car than you can because of their relationship with auction houses and scrap dealers.
One thing that you have to keep in mind, which a lot of people don’t is that if you are going to claim a tax deduction for donating your car you are going to have to itemize on your tax return. This catches a lot of people by surprise and they find that they don’t have all of the records that they need to do this. Therefore if you are planning to donate your car you are going to want to make sure that you keep good records of all your financial transactions so that you will be able to itemize when the time comes.