The ABCs of Car Donation – M is for Money

When you donate your car to charity, you will save a lot of money. First, you will save money at the car dealership. Most auto buying guides say you will be able to negotiate a much better price for a new or used car without a trade in.

Through car donation, you will save the money you would have paid to advertise the sale of your car either on the internet or through the newspaper. Also, if your car does not run, has a major mechanical problem or a lot of body damage, you may have to fix it in order to sell it for a decent price. Donating your car will save you the money you would have paid in repair costs. Also, you will not lose any money by having to take time off from work to show the car, fix it, etc. And, if your car is in really bad shape, you will not have to pay money to have a junk yard come and tow it away.

Most car donation charities will be quite happy to accept your car no matter what condition it is in. You will simply need to give them a valid title. When you donate your car to charity, they will pick up your car fast and free and at a time that is convenient for you. That will save you money on the unused part of your car insurance, registration, license plates, etc.

You will be eligible for a tax deduction of at least $500 when you donate car to charity. To claim your money saving tax deduction, you just need to itemize on your federal income tax return. In most cases, the charity you donate your car to will sell it. If they are able to sell it for more than $500, that sale price will become the amount you can claim as your tax deduction. Unlike many things in life, getting a tax deduction by donating a car to charity is not a gamble it is a sure thing.

The charity you choose to donate car to will use the money generated from its sale to help further their mission. They may use it to help fund research on a wide variety of illnesses or diseases. They may use it to provide information and services to those inflicted with aliments, or with mental illness. The proceeds might be used to provide counseling services, for education or for programs for young people. The money may even go to help fund services for wounded soldiers, veterans or their families. Some charities use the proceeds from the sale of car donations to help provide shelter, food and medical services to needy individuals or homeless animals.

When you donate car to charity, you save money in many ways and the charity is able to use the money generated from its sale in many ways too.  Car donation is a very good thing for your bottom line and for that of the charity as well.

The ABCs of Car Donation – L is for Learn

Learn everything you can about the entire car donation process and its benefits to you. First, learn whether you can claim the tax deduction  you will receive for donating your car to charity.  You can only claim the tax deduction if you itemize on your federal income tax return. 

If you regularly itemize on your taxes, you will get a financial benefit if you donate your car. If you do not normally itemize, you should learn whether you will be able to if you donate car. A simple way to learn whether it will make a difference is to re-calculate your previous years’ taxes as if you donated a car. If car donation would have allowed you to itemize on your taxes last year, it probably will this year as long as there are no other major changes in your financial situation.

Next, learn what charities will let you donate your car based on its condition.  Many charities will only accept vehicles that are under ten years old, run and have no significant problems, rust or body damage. If your car does not fall into this category, you only have to do a little research to learn what charities will accept it.

Once you compile a list of charities, learn all you can about them. One of the first things you will want to learn is whether the charity is an IRS qualified organization. If you donate car to an unqualified organization, you will not be able to claim your tax deduction. In general, qualified organizations are 501 (c) (3) organizations. To learn more, see IRS Publication 78. Other things you will want to learn about the charity is their reputation in general, any complaints that have been filed against them, the portion of proceeds from car donations that go toward charitable purposes, etc.

Next, you will want to learn about the entire car donation process. Learn where and how to sign over the title to your car. You are the seller and will need to sign the title in the space marked “seller’s signature”. You need to sign your name as it appears on the title. If there is a lien listed on the title, you need to learn whether a lien release is necessary.

Once you sign the title, you need to learn what to do with it. Some charities ask you to leave it in the car. This is never a good idea. Some will ask you to give the title to the towing service when they pick up the car. Still some charities will ask you to mail the title to them. They ask that because it is safer for you to have it in their hands rather than those of the towing service.

You also need to learn what to do with your license plates. Most states require you to remove them.

Finally, learn what type of documentation you will receive from the charity. If your car is sold for more than $500 the IRS requires the charity to provide you with IRS Form 1098-c.

The more you learn about car donation the smoother the process will be for both you and the charity you donate car to.

The ABCs of Car Donation – I is for Investigate

Investigate the charity or car donation center you are thinking about donating your car to. All charities and all car donation centers are not alike. As with everything is life, there are some good ones and there are some unscrupulous ones. You will not know if you do not investigate them. There are some relatively easy ways you can do that.

Before you donate your car to a charity or a non-profit car donation center, you should check out their tax filings by simply logging onto irs.gov. Once you do, click on the charities and Non-Profits tab and then the Search for Charities button on the left. You can also check them out through sites like Charity Navigators, GuideStar, etc. You should also check with the Attorney General’s office for your state to see if any complaints have been filed against the charity. In 2010, the New York State Attorney General launched an investigation into several alleged “scam” car donation charities in the New York City area. One of them was actually shut down because it used less than two percent of the money from car donations for charitable purposes.

The other thing you should investigate is the tax deduction you will receive when you donate car. Most charities sell car donations because there is too much liability involved in giving a car to a needy person or selling it to them at a really low price. In addition, charities rely on the proceeds from the sale of car donations to help them fund their mission.

If the charity sells you donated car, you can claim the greater of $500 or the amount the charity actually sells your car for. To maximize your tax deduction, you will need to investigate how the charity or car donation center will sell your car. Some charities sell all car donations to the same vendor. This is never a good idea as the more competition there is the higher the sale price is likely to be.

Other charities auction all cars. This is a good thing if the donated car is in decent shape. However, if the car needs repair or is in poor condition, it may not bring the best sale price. The reason for that is because the buyer has to pay a fee to enter the auction and another fee to purchase a car at the auction. Buyers often take these fees into consideration when bidding on vehicles.

Often, the best sale price comes from using multiple vendors for selling donated cars. Here’s why. If the donated car is in good condition, it makes sense to sell it at auction so that more buyers are allowed to bid on it. If the car is in fair condition, selling it directly to a used car dealer may bring the highest price since they may be willing to pay more money for the car to avoid the fees charged by the auction facility. If the car is really in poor condition, a parts yard may be willing to pay top dollar for it so that they can re-sell the useable parts and the scrap metal from the car.

Investigating the method the charity or car donation center will sell your car for will help you determine whether they will get you the best tax deduction for your donation.

The ABCs of Car Donation – G is for Good

There are good car donation centers and there are some not so good ones you can donate your car to. In 2010, the attorney general for New York State launched an investigation into several possible “scam” car donation charities in the New York City area. One car donation center was actually shut down because it used less than two percent of the money from car donations for charitable purposes.

You can easily find out whether the car donation charity you are thinking about donating your car to is a good one or not a good one. You can check them out through the attorney general’s office for your state. You can also check them out through the internet. With all of the really good car donation centers out there you can donate car to, there is no reason to choose any center that is not good.

Once you do find a good charity to donate car to, you will feel good about your decision. Your car donation will do a lot of good as well. If your donated car is in good condition, the charity may decide to use it themselves for their own charitable purposes. They may even decide to sell it to a person in need at a greatly reduced price or even give it them.

If your donated car is not in good condition, but is easily repairable the car donation center may repair it before they sell it. If your donated car is not easily repairable, the car donation center will sell it as it is. You can still feel very good about donating a car that is rusted or is basically junk. Since the price of scrap metal is up, the charity will be able to sell it for good money.

Most car donation centers sell all donated cars in the condition they are donated in. They do it because it is good for them. It is good for them because they do not have the expense of making repairs, they do not have any liability issues and they get the cash for the cars quicker. Improving their cash flow is a very good thing for the charity.

Another good thing about car donation is the good tax deduction you will get when you donate car. In general, your good tax deduction will be the amount the charity sells your donated car for or $500, whichever is more. However, if the charity uses your car, sells it to a needy person for an extremely low price or gives it to them, your good tax deduction will be the fair market value of the car.

There are a great many good things about car donation. You get rid of a car you no longer want or use. That alone is a good thing. The charity you donate car to will either put it to good use or get some good money for it which will help them do good things. You will also get a good tax deduction when you donate car. Car donation is truly all good.

The ABCs of Car Donation – E is for Execute

Once you have determined what charity you want to donate your car to, you have to execute the transfer of your car and its title to the charity. With respect to the title, make sure you fill in the correct odometer reading and sign your title in the correct location. You are the seller, the charity is the buyer. Therefore, you have to sign it in the place marked “seller’s signature” If your car is titled in the states of Arizona, Kentucky, Louisiana, Montana, North Carolina, Ohio, Oklahoma, Pennsylvania, or Wyoming, your signature on the title has to be notarized. Do not sign the title in the “re-assignment by licensed dealer section”. If you are not sure where to sign it, find out from the charity or your local Department of Motor Vehicles.

You also need to make sure you sign your name the way it appears on the front of the title. For example, if the title is in a maiden name, the signature needs to be as well.  The exception to this occurs when the title is in the name of someone who is deceased. In this case, the title should be signed by the executer of the estate. In addition, you will need to provide a copy of the death certificate and a copy of the will or power of attorney.

If you make a mistake on the title, DO NOT scribble it out or use correction fluid. If you do, it will void your title and you will have to get a duplicate title before you can donate car. If you make a mistake, put one line through it and sign either above or underneath it. You can also use an affidavit of correction.

Next, fill in the name of the buyer. That name will either be the name of the charity you are donating your car to or the car donation center representing them. DO NOT leave the name of the buyer blank!

There are basically three ways to deal with the title. You can simply leave it in the car, you can hand it to the tow truck driver or you can mail it to the charity or the car donation center. DO NOT leave the title in the car! This may seem like the most convenient method, but it also has the most risk. If you leave the title in the car and the tow truck driver does not leave you a receipt, you will have no proof of your car donation. Leaving the title and the keys in the car is also an invitation for someone to steal your car!

Handing your title directly to the tow truck driver is safer, but still has some risk. Most charities do not pickup car donations themselves; they hire towing services to do that. Therefore, the tow truck driver will not be able to examine your title and other documents to make sure they are all in order. Also, most towing services pickup car donations for multiple charities. Therefore, you will need to make sure you get a receipt that is for the correct charity.

Another risk associated with giving the title to the tow truck driver is that they could lose it. This is a major inconvenience for you and the charity. It is for you, since you will probably have to get a duplicate title and the sale of your car will be delayed.  The average cost of getting a duplicate title is $20. It is an inconvenience for the charity because of the delay in the sale of your car. This means that they will not only have to wait for their money, but they may have to pay storage fees as well.

DO NOT hand over your title unless you have the name of the buyer completed.  If you do and the tow truck driver is unscrupulous, they could write their own name in as the buyer and can in effect legally steal your car. This is rare, but it can happen.  

Many people are hesitant to mail their title for fear of it being lost in the mail. Mailing it in a manner that provides you with a tracking number will minimize this risk. Mailing the title to the charity is actually safer for you and the charity. First, once the charity or car donation center receives your title they will be able to tell you if everything is in order before your car is picked up. If there is a problem, they will advise you on the proper way to fix it.

Now that all the title issues are handled, you just have to execute getting the car to the charity. First, make sure you remove all your possessions from the car, including the toll tag, garage door opener, etc. You should also vacuum out the car. This will help it to sell for a higher price, giving you a better tax deduction and the charity more money.

If the car is in your driveway, position it where the tow truck can easily get to it. Make sure all four tires are inflated. If one tire is flat, your driveway may be scratched when it is pulled onto the tow truck. If your car is licensed in any state except, Alaska, California, Delaware, Hawaii, Kentucky, Minnesota, Oklahoma, Oregon, South Dakota, Texas or Washington, you should remove the license plates. You will need to transfer them to another car or return them to the Department of Motor Vehicles so you can cancel your car insurance. If your car is licensed in New Jersey, New York or Pennsylvania, you should scrape the inspection and/or registration sticker off the windshield. This will prevent you from receiving any unpaid tickets issued to the next owner of your car.

If your car is parked on the street, you will need to wait for the tow truck to arrive before you remove the license plates and stickers. If you remove them prematurely, you may receive a ticket.

Car donation is a very charitable act that has many rewards for you and the charity. As always, the correct execution is the key to a successful outcome.