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Donate Your Car For A Serious Tax Break!

by Redeeming Riches on February 23, 2012

You’ve had your car for years now and it’s time to sell her.  What do you do?  Most likely, you would probably set up an ad on Craig’s List and try to sell it to a private buyer.  Let’s say that the first buyer is not impressed and you post your ad again.  The second buyer swings by and says no thanks.  At this point, you’re bummed and just want to get rid of your car.  A third seller comes by your house and bargains you down to an obscene level because of your frustration.  The buyer walks away with your used car and you feel depressed and used.

Sounds familiar doesn’t it?  With the nation’s tax deadline approaching, selling your used car is not always the best options.  Have you ever considered donating your car to charity ad writing the Kelly Blue Book value off on your tax return?

donate your car

This can be a real win-win for people that wish to help someone less fortunate and receive a tax deduction at the same time.  This is especially beneficial for people who don;t need the money right away and would rather help someone out!

How does the car donation tax credit work?

Taxes are confusing for most people so hopefully I can clear up how a car donation would work for your taxes this year.  There is a major difference between a tax deduction and a tax credit.  A deduction is subtracted from your adjusted gross income whereas a tax credit is subtracted from the tax you owe.  With a car donation, it is considered a tax deduction, therefore it’s especially beneficial for families who earn a substancial amount of money during the year.  Also, you can use this deduction on any year, so the fear of losing the deduction is never a worry!

Donating your car is probably one of the most substantial tax deductions out there and easily transferable to a charity assuming that you have the current title and registration.  Once the charity of your choice takes the car off your hands, they usually fix the car up and give it to a needy family.  Heck, your car doesn’t even need to be running properly!  The charity will take care of any mechanical issues and pass it along to someone in need.

You’ll want to make sure that the charity is qualified by the IRS and that the IRS will accept car donations.  It would be depressing to later find out that your deduction is void.

Calculating the value of your car donation

There are really a couple ways you can value your tax deduction for a car donation.  The first is if the charity chooses to keep the car for their own use.  Maybe they need a new var to make errands or shuttle employees.  You need to find this out because if they keep it, you can write off the fair market value of the car!

If the charity ends up selling your donated car, you will need to find out what they sold it for.

Donating for tax deductions!

As you can see, donating your car can be hugely beneficial to your taxes.  If you’re on the fence this year for selling your used car, donate it and get a serious tax deduction this year.

photo by donkeyhotey

 

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