3 Easy Steps To Donating Your Car To A Good Cause And Being Rewarded With A Tax Deduction
If you have an old car sitting around or just upgraded to a new model and are unsure what you want to do with the old one, then why not donate it to a worthy cause? You may at first think it will be a huge hassle to donate it, but donating your car and claiming it on your taxes is actually very simple. Follow these three easy steps, and you can feel good about helping an organization in need and also be rewarded for your good deed when it is time to file your yearly taxes.
1. Determine Your Car's Value
You must first determine what your car is worth, so you can obtain an appraisal if needed. An easy way to find out what your vehicle is worth is to visit KBB.com, also known as the Kelley Blue Book website, and follow the easy instructions on the site. If you find out that your vehicle is worth less than $5,000, then there is no need for an official appraisal of the value. If it is worth $5,000 or more, then you do need to obtain an appraisal from an IRS qualified appraiser. Hold onto this information, because you will need it later.
2. Find an Organization That Needs Your Support
There are many organizations today that accept vehicle donations, and your choice shouldn't be made by which has the largest advertisement in your local paper. Charities with large advertising budgets often end up using more of the proceeds from the sale of your car on advertising than they use to help others.
The American Institute of Philanthropy, also known as Charity Watch, advises the public to donate their vehicles to organizations where they will be put to good use, like trade schools such as Newgate School that need vehicles for their aspiring mechanics to work on. What could be better than helping the unemployed and underemployed learn an important skill that can help them succeed in today's tough job world?
3. Donate Your Car and Obtain Necessary Documentation
Once you have chosen the organization you would like to receive your vehicle donation, you can arrange to drop it off or have it picked up. If your car is not running, most organizations will foot the bill to have it towed in. You should always request a document from the organization detailing the date of your donation, the value of the vehicle, a description of the vehicle, and the name and address of the organization receiving the donations. If your vehicle value is over $250, then you also need to obtain a document called a contemporaneous written acknowledgment.
Don't worry about forgetting any of these details, because organizations that accept car donations typically know exactly what you will need when filing your taxes. They will make sure they give you a receipt with all the details you will need to thank you for your contribution.
Tax-time Tips: If the organization keeps your vehicle to use as a teaching tool for students or sells it at a reduced price to the needy before you file your taxes, then you can claim the full value as a charitable donation on your next tax return on line 14 of schedule A of your tax return. If your car's value was over $500, then one additional short tax form must be completed, and another if the value was over $5,000. If the car is sold at auction, then you may have to adjust your deduction slightly.
Donating your car to a worthy cause is very simple and very rewarding in many ways. You can feel good that your old car is being put to good use and take advantage of a great deduction when tax season arrives.