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Tips on How You Can Donate Car for Tax Credit

donate a car for tax credit

Many people are interested in donating their cars because they want to take advantage of the tax deduction. You can either donate your car directly to the charity or donate the car through a middleman company. You should pick up the phone to contact a national clearinghouse if you are looking for a charity organization that will accept a damaged car that is no longer operating. This type of charity organizations would collect any type of car and they would come to your place to tow it away and resell the parts. On the other hand, if you want to donate your car to a charity that will be using your car for their own charity purposes, it is going to involve more paperwork.

If you want the car to be made use of for charity purposes, you should contact the United Way Office to ask for a list of registered charities and their telephone numbers. When talking to the charity on the telephone, you must confirm with them that they will use your vehicle for the charity purposes as how you wish. You should avoid charity organizations that have a lot of costs because more costs means your vehicle will have lesser values for their charity programs.

You can get tax deduction when you donate your car to the charity. However, the deduction value is lower if the charity sells the car because of the new tax laws. For example, if the Kelley Blue Book states that your vehicle has a fair market value of $7,000, and the charity sells it for $6,000, you can only claim the deduction up to the sales amount, which is, $6,000. So, you should not be looking for a charity that will sell your vehicle if you want to get the most tax benefits out of the donation.

It is best not to go through a middleman otherwise the charity won’t be able to get the full benefits. The middleman may help you to do the paperwork but they will be keep more than half of the value of the car. This means that the charity of your choice is not getting the value that they could have receive. As a result, you get much lesser tax deduction from the car donation.

You should do some research until you find a charity of your interest that accept car donation. To verify the credibility of the charity, you should perform a background research at the Better Business Bureau or Charity Navigator. You should at least ask the company the percentage they will be giving to the charity if you are busy and don’t have time file the paperwork. You won’t be eligible for tax deduction of the company only payout a flat fee or a monthly fee to the charity organization. Besides, the charity organization that you choose to donate your car has to be licensed as a 501(c)(3) organization by the IRS. You can visit the IRS site to find non for profit organizations that are 501(c)(3) approved.

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