Donating your car to a registered 501 non-profit public charity with the IRS can provide a tax break. Choose a charity that offers incentives and research state laws before completing the process.
You may not have considered this before, but car donation is becoming a popular way to get rid of unwanted vehicles and get a tax break in the process. If you’ve never considered donating a car before, here are some tips on how to manage the process painlessly.
Donating your car is easier than you think. You can do this locally by contacting the charity of your choice, or go online to find a charity that will pick up the car without any effort on your part. This may be the best way to handle your car donation if your vehicle is no longer running or has some major problems that make it unsuitable for every charity. If you think handling the car donation yourself is too difficult, there are also services that would handle the swap for you for free.
When you’re looking for a charity, be sure to choose one that is registered as a 501 non-profit public charity with the IRS. This means that the organization is legally authorized to accept donations and provide tax benefits. Charities accepting a car donation will already have the necessary documents for such contributions, and the exchange should be fairly straightforward. This paperwork is the key to claiming a tax break at the end of the year, so be wary of any charity that claims you don’t need it.
Car donation has become so popular that charities now offer incentives for you to choose over other organizations. These incentives range from free hotel stays to free bicycles, gym memberships or car rental coupons. Incentives are legal, so don’t be afraid to choose a charity that offers them.
Once the car donation portion is completed and the title to the car has transferred, you can claim the donation as a tax deduction. If your car’s fair market value is more than $500 US dollars, however, you may need additional paperwork from the charity, such as a bill of sale after the organization has disposed of the vehicle. Laws vary from state to state, so you should research all your options before taking the final step.
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