Used Car Donation Pitfalls

If you are considering donating a used car to charity there are some things you need to be aware of. The first of those is that the IRS only allows you to use the value the vehicle is sold for as your tax write-off. Most of the time a car is donated it gets sold and the money goes to the charity. They usually don't actually use the car unless it fills a special purpose for them. The tax laws were changed because too many people were taking advantage of these huge write offs. Unfortunately this means if you donate a car that is worth $5000 but the charity only gets $1000 when they sell it, you can only deduct the $1000. The exception to this is if the charity decides to use the vehicle instead of sell it, in which case you can deduct the fair market value. Depending on your reasion for used car donation, it may make more sense to sell the car yourself and donate some or all of the money to the charity.

Choosing a Charity:

There are thousands of charities out there that are anxious to accept your unwanted vehicle. Most of them will arrange pickup of your vehicle within a few days and handle everything for you. Obviously charities make a lot of money from these vehicle donations so they try to make it as painless as possible for you to donate. Most of them even have online forms you can fill out giving details about your vehicle as well as contact information. Many charity directories exist to help you choose a charity in your area. You may decide to pick a charity based on the types of services they provide. If you have family members with diabetes for example, you may choose to donate your vehicle to an organization that does diabetes research. Many people have a strong feeling toward medical conditions like these if they have been personally affected by them.

Do your research:

Many car donation charities aren't even legally registered non-profit organizations. There are scammers out there as well trying to take advantage of people by taking their cars. The IRS web site has a charity search that you can use to verify an organization's legal status. Many of the donation programs are actually run by a 3rd party donation service who handles the vehicle pickup, sale, and donation disbursment. The problem with this is that these companies take a portion of the money as a charge for handling the donation, so you should find out exactly how much money the charity will receive when

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