Give Car To Charity

Think you may want to give car to charity? Well, that's a great idea! You may be wondering what kind of a tax write off you can expect? And you might have a few other questions that need to be answered before you make up your final mind about the whole charity donation car thing.

If so, you've come to the write place. Here you will (hopefully) find all the answers to your questions regarding donating a car to charity from tax write off questions, to car pickup and or towing, to anything else you might want to know about. But first, let's get the nasty tax business out of the way!

How Much Can You Deduct? Back in the day the IRS would let you deduct the fair market value. The problem is, people didn't report the fair market value, they donated what a dealer would actually get if they sold it. This number was almost ALWAYS more than the listed fair market value. Hence the IRS lost a LOT of money in tax revenue.

In 2005 the IRS changed the rule and actually made it a little easier for you, but a little harder for the specific charity. The rule now says (but be sure to check your own CPA or tax adviser in case it has changed since we built this web site) you can deduct exactly the amount that the charity gets when they sell it.

Yes, the Charity Will Auction Your Car Off: and when they do, they will notify you and tell you exactly how much they got. This is the case whenever they get more than $500 dollars for your car at auction. This is good because you don't have to guess and therefore can't get in trouble with the IRS. If your car sells for less than $500, you can determine yourself what the fair market value of your car is.

But this is important, you can only deduct the lesser of the two numbers. So if the charity sold the car for $250 and you think the fair market value is $400 you can only deduct $250. This is kind of a bad thing because if a charity gets a bunch of cars donated and they auction them all off at the same time, demand might not be high enough to get the best price for your car and you might end up with a low deduction. If you think this might happen, you might just be better off selling the car yourself and then giving the money to the charity. You would get a higher charitable deduction and the charity would get more money. Everyone wins.

Talk to the Charity First: Many charities are happy to get cars donated to them. They are equipped to deal with car donations, and have a system in place for picking them up from you (ie towing them) as well as a system in place to auction them off.

But many smaller charities may not be equipped to do this sort of thing. They might not have the staff available, and they might not understand the tax laws. It might cost them more to talk to their CPA and create an accounting system to handle the extra paperwork than your car is worth. So be sure to talk to whichever charity you want to deal with before you donate the car.

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