When you read the title, you will surely have the question of reason for donating the used car. There are several advantages, including saving taxes, being charitable, and saving time. There is a strong reason that the vehicle is of no use to you, but it will surely benefit people associated with the charity.
At present, several people are coming forward, and selling their automobile to charity. These people get a huge tax reduction, and there is only a minimal risk involved. If you can follow the below guide; you will give the maximum donation to charity, and have minimal risk.
- Finding Charity that Accepts Car Donation: Initially, you should avoid organizations, who are interested in keeping a major amount of money for themselves. Additionally, there are several reputable agencies, who keep more than 50% of the charity amount for their own troubles. You need to find an organization, which complete their transaction themselves, and keep 100% of their profits. You are doing a noble cause, and you cannot simply give it to an organization, because they are charitable. Hence, a little research in your own region would help you to find the best organization.
- Drive the Car into Charity: Majority of the organizations would have to pay someone for picking your automobile. This adds cost to the organization, and you can increase your amount by driving your car to the organization.
- Research the Percentage that Goes to Charity: There are no guidelines set by IRS, which states the amount that should go to charity. The amount is decided between the charity, and handlers. You need to confirm with the organization about the amount, which will go to charity.
- Organization is 501 (c) (3): There are several organizations, who claim to have non-profit status, but only the donations made in 501 (c) (3) are non-tax-deductible. These organizations are approved by the Government, and your recipient must have the above status.
- Transfer the Car to Charity: There are some organizations, who would convince you to leave the ownership space blank, so they don’t have to go through the process of retitling the auto. If you come across such charity; you should immediately leave the place. If you are not transferring your car to the organization; you will have to bear the entire future parking tickets, and you will be held responsible for any crime. There are strong chances that your used car would not be used to serve meals for the needy, but it would be sold for faster profits. Alternatively, if it is not sold in auction, then it would be your property in the eyes of law.
- Examine your value of Car: IRS is extremely concerned about the tax deductions, associated with the charity, and they have increased the audits in most of the regions. The actual deduction is calculated after the car has been sold, and the receipt is sent by the charity to the donor.
- Completing the paperwork: Non-cash donations can create issues with the audit, and it is mandatory to have documentation of the car donation. As per guidelines, if your used car is valued more than $250, then you will need written acknowledgement from the charity organization. Similarly, if your used car is valued more than $500, then you will have to fill the section A of the IRS form 18223, and attach it to your yearly taxes.
Lastly, it is obvious that the real winner will be a donor, and not the charity. Hence, it is individual best interest to stay away from marketing schemes, and research about good charitable organizations in the region.
