You’ve probably heard or seen the ads previously. Donate your old car to a charity, and get a tax conclusion consequently. Sounds like a smart thought. Accomplish something pleasant for another person and get rewarded for it. Is there a catch? Maybe.
Before you give away your vehicle, know about the potential pitfalls of car donation.
Beware of Car Donation Scams
The car donation business attracts scammers. Now and then the charitable organization itself is fake. Now and then the general population selling the cars are fraudulent. In some cases, it’s even the towing company that is taking individuals for a ride.
Indeed, even generally reliable residents were getting in on the action until a couple of years ago. Prior to 2005, anyone donating a car could subtract the “fair market value” of their car on their taxes. Unfortunately, much of the time, the fair market value was miserably out of match up with reality. The genuine market value of the vehicle wasn’t near the “book value” of the car, so a few givers were getting an artificially high break on their taxes.
Be that as it may, the laws have since changed. We’ll get to that in a bit.
The car donation business is big―and developing. Donating a car is a great way to help support charities. Today, most charities are in greater need than ever for this. Late tragedies, similar to Hurricane Katrina, mean that individuals who usually donate to their local charity are donating to help these people instead. There are just so many donations to go around.
Most charities contract another person to run the car donation programs.
Make Sure Your Donated Cars Will Be very Well Spent.
So how might you shield yourself from car donation scams? And what about these new tax rules?
Start by asking a ton of inquiries of the charity you are donating a car to.
Discover what percentage of the returns from sales of donated cars will go to the organization.
See if the charity expects to sell the car donation or will keep it for its own utilization.
Ask who’s doing the actual selling and what percentage they charge.
Try not to be bashful about asking questions. It’s your vehicle, and this could be the greatest donation you’ll make this year.
Different things to recall while donating cars:
Make beyond any doubt you have the correct charity. Many of them have similar names, and it’s easy to confound a local charity with one from far away.
In the event that your favorite charity doesn’t advertise that it accepts car donations, ask anyway. Many need cars to utilize or would accept your car and then offer it.
In the event that despite everything you have concerns, contact your state attorney general’s office or your local Better Business Bureau office for more information.
You should check to make beyond any doubt that the charity you are donating cars to is seen as a tax-excluded organization according to the Internal Revenue Service (IRS).
You can also ask the organization to demonstrate to you a duplicate of its tax-excluded status determination letter.
A few organizations, for example, places of worship, synagogues, and government elements, aren’t recorded in the publication. Nonetheless, a donation to any of these organizations is as yet viewed as tax deductible.
It’s a smart thought to transfer the title of any donated cars to the organization and make a duplicate of the title transfer for yourself. Take an image of your vehicle before handing it over.
Claim the Car Donation Deduction
As anyone might expect, the tax rules concerning car donations are a bit of confounding. It’s ideal to check with the IRS or download IRS Publication 4303: A Donor’s Guide to Vehicle Donations for complete details.