Giving your car to charity is an excellent way to turn an old beater into something that can potentially change a life. If you know your vehicle doesn't have much value and don't want to sell it for scrap, donating can also be an easy and effective way to get an old clunker off your property. Whatever your reasons, charitable causes are one of the best places for old cars to find a home.
However, donating does require some care, especially if you've never done it before. These three tips will help ensure your car goes to a good cause and that you receive the tax benefits you deserve for your donation.
1. Research Your Chosen Charity
There are plenty of tips for finding a charity that you want to donate to, but you should always perform a little research on any organization before handing your car over to them. At a minimum, use the IRS website to confirm that you're donating to a tax-empty (nonprofit) organization. You can also use this site to start your research by locating some charities in your area.
If you want to receive a tax deduction for your car, it's crucial to choose a charity registered with the IRS as a nonprofit. You can donate your vehicle to for-profit organizations, but you won't receive any tax benefits for doing so. You may also want to perform a little more research if you're working with a for-profit organization instead of a nonprofit.
2. Know Your Maximum Deduction
When it comes to donating a vehicle, there's a line in the sand at $500. Unless the charity sells your car for more, you'll usually only be able to deduct a maximum of $500. This limitation may also apply if you don't receive adequate documentation from the charitable organization for your contribution. If you know the charity will be selling your vehicle, they'll need to provide you with additional documentation.
As a general rule, you cannot simply deduct the fair market value for your car. You can only use this value in some specific cases, and you'll need the charity to provide you with written statements indicating that these conditions apply. These conditions are usually only applicable when the charity uses the vehicle directly or gives it away.
3. Don't Leave Anything Behind
You typically don't need to do much to prepare a car for donation, so it's not necessary to waste time cleaning your old car or making it presentable. However, you should check the interior to ensure you aren't leaving any personal items behind. Ensure you check the trunk, glove box, door pockets, and anywhere else you might have left essential belongings.
Charities don't always have easy access to the cars they take, so you may not be able to get into your vehicle again. Taking the time to remove items now can save you from hassles and disappointment after the truck arrives to take your car away.
For more information, contact a local organization, like Cars 2 Charities.