Charity Cars: What are the Advantages of Donating Cars to Charity Salvation Army Car Donations Consultants The practice of donating cars to charitable institutions is widely practiced in America and is very much favored by the government and its citizens. How to Participate in this Activity You can participate in this practice if you have a car you no longer use; you can send it to your chosen charity instead of selling it back to the market. You still get to benefit from car donation because of the tax breaks provided by the government. You can use the value of your car as the basis for tax deduction. However, you need to be careful when picking a charitable organization because not all charities are recognized by the government. If this is your first time to give a car to charity and you don't know what to do, you can contact agencies that handle car donation. This group will help you with the paperwork so you can benefit from the act. These agencies will help you process everything even auctioning of the car and giving the proceeds to your chosen non-profit group. Kidney Foundation Car Donation Apart from helping you auction and donate the proceeds to charity, the firm will also help you file the appropriate deduction as indicated in the law. But you need to be careful when choosing the firm that will handle your used car. Some of these firms are unreliable because they will only give a small portion back to your chosen non-profit organization. These unreliable firms are only here to take advantage of you and your chosen charity which is why you need to pick a trustworthy company that will help you dispose your used car. Benefits of Donating Cars to Charity As discussed above, the benefit of donating cars is tax considerations. The government will allow you to place the fair market value of the car as a deductible. The amount to be deducted would depend on what the charity does with your vehicle. For instance, if the car you donated to the charity which you estimated at $4,000 was only sold for $3,500, you are allowed to use the latter in your tax deduction. But if the charity decides to keep the car and use it in their operation, you can use the FMV of your car. If the car was valued at $4,000 you can use this amount as the basis of your tax deduction. Tax breaks are provided by the government to its citizens and you can also avail tax considerations through different means. One classic example is donating vehicles to charitable institutions. Thousands of people engage in the practice because the tax consideration is really beneficial especially when they are able to deduct a big amount. In addition, this practice is also very positive among citizens because the action is indeed very kind. Donating cars to the underprivileged is one way of getting back to the community. These are the reasons why so many individuals engage in this act. The used vehicles are advantageous to themselves and to the underprivileged.
Tax Considerations from Car Donations Explained The government specifically the IRS, allows tax payers to deduct the value of their car donations to bona fide non-profit organizations because it recognizes the deed of giving back to the underprivileged. However, there have been changes as to how an individual can take advantage of this practice. The IRS has created a guide on how a donor can use the deductible amount on his or her tax returns. Here are the guides and their respective examples. Scenario 1 If the amount of your old vehicle is estimated at $400 and you donated this to a bona fide charity, you are allowed to deduct up to $500 in your tax returns. Scenario 2 If the fair market value of the truck is $4,500 and the charity sold it for $3,500, the donor is only allowed to use which ever value is lower. Scenario 3 If the vehicle is worth $4,500 and the charity decided to employ the vehicle in their daily operations, you can use the FMV as the amount deductible. Scenario 4 Finally, when the $4,500 vehicle was used by the group but it spent $2,000 for repairs, you can only deduct $2,500 because that is the real value of the car you donated. So if the nature of your car donation falls in any of these situations, it is important to follow them so you can avail of the tax consideration mandated by the law.