Should I Sell or Donate My Car?

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When it comes to donating to charities, there are many reasons and ways to do so. When people give of their time, talents, energy and funds, it fosters a sense of community, can help those in need and forward a worthy cause. While time and energy no doubt are appreciated by nonprofits, money is the universally accepted method of helping most of them.

On the other hand, property donations, such as real estate and vehicles, also are appreciated. Some charities even specialize in car donations to sell for cash, use for their activities or to give to families in need. If you’re looking to get rid of an unneeded vehicle and do some good in the community, car donations are a great way to do both.

3 Ways Your Car Can Help Your Neighbor

Donate it: There are many charities that accept car donations, and you’ve probably seen billboards or heard radio ads suggesting that you do it. It’s one of the easier options. Charities that specialize in car donations typically assist the process by offering towing services, handling title transfer and automatically sending paperwork for tax purposes. On the other hand, you might not be able to deduct as much as you thought, if at all, because the vehicle may not sell for your appraised value, or the nonprofit might not be qualified as a charity organization, leaving you unable to deduct anything.

Sell it: It typically takes longer to sell a car to a private party, averaging 60 days per sale, so you’ll hold onto your car for a little longer. You usually can get a bit more money for it than an outright donation, though. It’s a little more complicated because you’ll have to do the title transfer paperwork yourself. Then, you can donate the resulting cash to the charity of your choice, or more than one, if you’d like. Cash donations always are appreciated and come with the same tax exemption privileges.

Give it away: Another way to get rid of your car without selling it or donating it to an organization might be to simply give it to someone you know in need. Ask friends and neighbors if they know anyone in need of a vehicle. You might widen your network to include co-workers, members of a social club or a church group. By giving your car to someone in need, you get the satisfaction of knowing it went straight to someone that can really use it, which is a great feeling. Unfortunately, this option doesn’t give you any tax benefits.

Can I Claim a Car Donation on my Taxes?

The Internal Revenue Service (IRS) allows donors to claim a deduction on their taxes for charitable donations, whether cash or car, but there are limitations to claiming the credit. The National Center for Charitable Statistics lists more than 1.5 million nonprofit organizations and charities in the United States, but it’s good to know that this doesn’t automatically make them tax-exempt. If you’re considering donating your car to a charity, your research should include finding out if the organization is legitimate and whether it qualifies as tax-exempt. Tax-exempt status can be looked up on the IRS Exempt Originations Select Check Tool.

Current tax laws, for the 2017 tax year, allow car donors to claim a tax exemption based on the value of the vehicle. Under $250, just keep a receipt or record in your files. From $250 to $500, you need a letter of acknowledgment from the charity. Up to a $5,000 value, along with your IRS Form 1040, be sure to file IRS Form 8283, Noncash Charitable Contributions, Section A. Over a $5,000 value, file IRS Form 8283, Noncash Charitable Contributions, Section B, along with a written appraisal from a qualified vehicle appraiser.

By | 2018-06-19T15:49:33+00:00 February 16th, 2018|Car Selling|0 Comments

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