If you're buying a new car, you may be considering car donation as one option to get rid of your old one. There are a number of advantages to donating your car to charity instead of selling it or trading it in, especially if your car has a relatively low fair market value. Before you decide to donate your car to charity, you should consider the advantages and disadvantages to be sure that you're making the right decision.
Where to Donate Your Car
CAR DONATION
There are several different ways that a charity might use your contribution, and the tax treatment of your charitable donation will vary depending on what the charity intends to do with your car.
Many organizations will sell your car at auction and use the proceeds to benefit their clients. If you donate your car to this type of charity, your tax deduction is limited to the charity's actual gross proceeds from the sale. So, if you donate a car whose fair market value is estimated at ,600, but the charity only gets 0 for it at auction, your deduction can be for no more than 0.
Some organizations will give your car to a needy individual or family, or sell it to them at a price considerably below fair market value. In this case, you may be able to deduct the entire fair market value of the car on your taxes, as long as the charity provides you with a statement that the car will be given or sold at a reduced price to a needy individual who needs it for transportation.
If the organization intends to keep the vehicle and use it as part of fulfilling its mission, you may be able to deduct the fair market value of the car on your taxes. For example, if you donated a vehicle to a charity that intends to use it to deliver meals to shut-ins, or to provide transportation for the needy to doctors' appointments.
Other Advantages of Car Donations
There may be other advantages to donating your car to charity. If you're buying a new car, for example, the dealer's valuation of the car is likely to be far below fair market value. If instead, you choose to donate your car to a charity that will sell it, you may be able to deduct the fair market value on your taxes-and have the additional satisfaction of knowing that your contribution is helping a disadvantaged family. Donating your car to a charity can be far less of a hassle than trying to sell the car yourself. You'll save the out-of-pocket expense of advertising your vehicle for sale, and won't have to deal with the hassle of doing business with strangers. Instead, the charity will usually make arrangements to pick your car up and handle all the details of making the sale.
As long as you do your homework and understand the options, car donation can be a win-win situation. You get the tax deduction and save time and money, the charity gets a valuable donation, and its clients get much-needed services to help put them back on their feet.
Charity Car Donation - Is It Right For You?
Chris Robertson is an author of Majon International, one of the world's MOST POPULAR website advertising companies on the web.
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