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 – K is for Knowledge

Knowledge is power even when it comes to car donation. The more knowledge you have about the car donation process, the better decision you will make about whether to donate your car and what charity to donate car to.

The answer to the question of whether to donate your car is determined by your motivation for donating it. If your motivation is simply to help the charity, the answer is of course; donate car.

If your motivation is get a tax deduction you will need to gain some knowledge about what the tax deduction is and if will you be able to claim it. To claim the tax deduction, you will need to itemize on your Federal tax return. That means you will have to file Schedule A. Your actual benefit from your car donation is determined by the tax bracket you are in. For example, if you are in the 35% tax bracket, your actual benefit is 35% of the amount you claim for your car donation.

There are several things that will determine which charity you donate car to. One of them is the mission of the charity. There are a very wide variety of charities that accept vehicle donations. They include international and national charities as well as state, regional and local ones. Their missions range from conducting research on many diseases and afflictions, to helping those who are afflicted, to animal rights issues, to environmental issues, to programs for young people, to care for the elderly, disabled, injured or abused, to local food banks, homeless shelters, hospices, etc.

Once you determine the mission you wish to support, you will want to obtain some knowledge of their efficiency, effectiveness, reputation, etc. There are a number of ways to can check them out. Some of the places you can check are Charity Navigators, the Institute of Philanthropy, GuideStar, etc. If the charity you are checking on does not have a good rating, those guides will show you alternative ones.

Once you have narrowed down you choices, you will need to gain some knowledge about their car donation process. One thing you will want to know is whether they handle donations themselves or use the services of a car donation center. Many use a car donation center. One reason they do is because the vast majority of donated cars are sold. There is a certain level of expertise required in operating a car donation program. It requires the knowledge of the rules and regulations involved in the sale of vehicles, the transfer of titles, what to do with the license plates, etc. These rules and regulations vary by state. Many charities prefer not to use their resources for this and often find it to be more cost effective to use a car donation center.

Next, you will want to gain some knowledge regarding the qualifications the charity has for accepting a vehicle. Many prefer to only accept those cars that run and are less than ten years old. Other charities accept vehicles in virtually any condition as long as they have not been stripped of their parts and are in a location from where they can be towed.

The more knowledge you have regarding the intricacies of car donations, the more you will know whether and where to donate your car.