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Donating A Car To Charity – Get A Donated Car From Charity

Admin Jan 17,2018
how to get a donated car

A Car Donation Could Help With Your Taxes

You can only deduct a vehicle’s fair market value on your tax return under very specific conditions.

It’s easy to give a car to charity if everything you wish to do is get rid of it. Only call a charity which accepts older vehicles and it’ll tow your pile off. But if you would like to maximize your tax advantages, it’s more complicated. Here’s a walk-through of a few of the concerns, together with the usual proviso that you should talk about these issues with your own tax preparer before you act.

You Have To Itemize Your Returndonating a car to charity
If you want to maintain a car donation to reduce your federal income taxes, you must itemize deductions. You might itemize even if the donated auto is the only deduction, but that’s generally not the best option.




Here’s the math: Suppose you are in the 28 percent tax bracket and the allowable deduction to your vehicle’s contribution is $1,000. That will save you $280 in taxes. If you’re in the 15 percent tax bracket and you get exactly the same $1,000 deduction, it will decrease your earnings by $150.

If the automobile donation is the only deduction, then it is very likely that taking a regular deduction could help save you tens of thousands more dollars in earnings. The only means that donating a car nets you any tax benefit is if you have many deductions and if their total, for example, auto, surpasses the standard deduction. And keep in mind, you can always contribute as much as you want to charities, but the IRS limits just how much you can claim on your tax return.

 

Only donations to qualified charities can provide a tax deduction for you. A qualified charity is one which the IRS admits as a 501(c)(3) organization. Religious organizations are a special case. They do count as capable associations, but they aren’t needed to file for 501(c)(3) status.
To help you figure out whether a charity is qualified, the simplest thing to do would be to utilize the IRS exempt organizations website, or call the IRS toll-free number: 877-829-5500.



In this situation, neither the buyer nor the seller may be an auto dealer. Both must be private parties.
What complicates the matter for taxpayers is that under current IRS rules, you can only deduct a car’s fair market value under four quite specific conditions:

1. When a charity auctions your car for $500 or less, you can maintain either the fair market value or $500, whichever is less.

2. When the charity plans to make “significant intervening use of the vehicle.” In other words, the charity will use the car in its own work.

3. After the charity intends to make a “material improvement” to the automobile, not just routine maintenance.

4. After the charity gives or sells the vehicle to a needy individual at a price significantly below fair market value.donate car to chairty

Determining Fair Market Value
Edmunds can help you determine your vehicle’s fair market value with its Appraise Your Car calculator. Input the car’s year, make and model, in addition to such information as trim degree, mileage and condition. By looking at the private-party price, you’ll get a precise idea of what your vehicle is worth.

Note the caution from IRS Publication 4303: “Should you use a vehicle pricing guide to determine fair market value, make confident that the sales price listed is to get a car that is exactly the exact same make, model and year, sold in the exact same condition, and with the same or substantially similar options or accessories as your car or truck.”

Obtaining Fair Market Value Is Rare
It’s not realistic to expect that your car will fulfill one of the strict fair market value requirements. Only about 5 percent of donated vehicles are suitable for usage by charity recipients. About a third of donated cars are junked, and the rest are auctioned off.

So unless your vehicle is in good or excellent condition, it will most likely be sold in auction or into an automobile salvage yard. And note that this price isn’t necessarily something you’ll know when you give the automobile, or even before the upcoming tax-filing time, since an organization has up to three years to sell your car.