There are a few aspects regarding the donation of your car to a charity of your choice that you should familiarize yourself with. When donating a car to charity, a tax deduction may or may not make good financial sense. But if your main focus is to be charitable then the tax deduction will merely be an added bonus.
Make sure that the charity you are dealing with is a reputable or qualified charity, seen as the use of the donated car may vary. The charity can either sell the car at an auction, or provide a needy family with the car as a gift or actually use the car for the charity itself. But most of the times charities choose to sell the vehicle at an auction and use the proceeds of the car to fund their program.
The majority of people find the donate car tax deduction process complicated seen as they do not understand the tax laws. The first rule to remember is that you cannot claim a vehicle donation tax deduction if you do not itemize your deductions when filing. If you do itemize your tax deduction and want to donate your car to charity, the first thing you will have to do is to determine the fair market value of your vehicle.
The vehicle tax deduction for the car donation should not exceed $500 USD except in the case where very specific criteria are met. If the donated car is more than 500 USD but less than 5000 USD you will only be able to deduct the amount which the charity received from the sale of the vehicle. So for example, if the fair market value of the car you are donating is 2800 USD, and the charity auctions it for 1800 USD then you can only take a vehicle tax deduction of 1800 USD. But, should the charity use the donated vehicle for their own purpose to further their cause, or for deliveries or pickups then you can deduct the full fair market value. However in this case specific information will be required to accompany your tax forms, so be certain that you obtain all the necessary information from the charity upon donating your vehicle.
Instead of it being a difficult process, when you make use of a donation service such as ours, Donate A Car, it will become an easy experience. Our qualified personnel will be able to answer all your questions and take you through the complete donation process, even arranging for your vehicle to be picked up.
So, if you want to avoid the hassles of trying to sell or trade your old car or truck and still get something out of it, then phone us or fill in the online form to donate your car to a charity and claim for vehicle tax deduction.