You have an old clunker in your garage and you’re wondering what to do with it. It’s not in good shape to sell, your kids don’t want it, and it’s such a waste to see it converted to scrap metal. So what do you do?
Donating used cars is one way to get rid of old junk without having to deal with the costs associated with it and score tax deductions at the same time. It sounds so simple and looks like a win-win situation for everyone, but that’s not always the case. There are certain things that must be considered before making car donations.
Here are some tips.
1. Find A Charity
Do some homework before making a donation. You’re giving away your car so others can benefit from it. When donating a vehicle to a cause, make sure they are qualified to receive your donation. Do a background check if necessary or check the organization’s track record. That way, you can be sure that your used car will be put to good use.
2. Know the Rules
There are IRS rules for car donations and knowing these rules will save you from a lot of trouble. Tax deductions are only applicable for your car donations if you itemize your deductions. Know the resale price of your car donation if it’s worth more than $500. Ask the receiving charity for a record. Keep a paper trail of all your transactions for reference. By doing this, you are shielding yourself from unnecessary liabilities.
3. Deal Directly with the Charity
We see pitches everywhere calling for car donations to support various causes, but sometimes, the charities don’t get what is supposed to be theirs. In 2011, vehicle donations generated $23 million in California alone, but charities were only able to get less than half of that. So where’d the money go? To middlemen!
Middlemen only make arrangements between donor and charity, but for some reason, they feel entitled to keep a large percentage of the gift for themselves. Deal directly with your chosen charity and if possible, deliver it yourself. This will allow the charity to maximize the benefits of your donation and make sure your donation goes where it’s supposed to.
Donating your car can be very simple if you know how to go about it. If you are not sure what to do, ask help from people who know. By observing the rules and exercising diligence, you can make the donation process a real win-win thing for everyone.