When and Where To Donate Car To Charity
When planning to make a donation, the question comes up most often is when and where to donate a car to charity to get the most out of your contribution. The answer is it is not as simple as in the past. Before, you can take a tax deduction equal to the value of the vehicle. This is called the fair market value. It is not that simple anymore. There are new tax laws in place to eliminate the possibility that people inflate the value of their donation. This makes it more complicated. Therefore make an effort to check things out before giving your car to your favorite cause.
Tax Changes
These donations are no longer taken off the top. In other words, you have to itemize your deductions. If you use form 1040A or 1040EZ, you cannot claim this deduction. It will be better to sell the car and give the money to your cause. It is not as easy to itemize as in the past. For example, a married couple with a joint return needs more than $11,000 in deductions. If your vehicle is worth a lot of money, this may be a viable option. Maybe you are close to the needed amount to itemize. A donation may put you over the top. This makes it a very good tax strategy.
Do not forget your vehicle value will not lower your tax by that amount. For example, your may make a donation worth $600. However it may only reduce your taxes by $200. This depends on the tax bracket that you are in.
Limits
You will have to wait to claim your donation. This is because you will not know the amount. In the past you deduct the value of the vehicle. Now you must wait until it is sold, and then deduct that amount. If your $700 vehicle sells for $600, you will claim the $600.
The good news is you will receive some protection. There is a limit of $500. Suppose your car sells for a very small amount, like $200. You can still claim a $500 deduction.
Where Can I Donate a Car?
Always check out whom you give your vehicle to. Make sure they are a reputable organization. It is a good idea to give the vehicle directly to a specific cause. If you avoid the middle man, more money goes to the organization. The reason is many fund raising organizations keep a big part of all donations for their administration expenses.
Conclusion
You will find many good reasons to donate car to charity. Be sure that you keep up with the new tax laws. You may not get as much as in the past. Check out the organization. Try to give directly to them and avoid the middle man. More money will go to your favorite cause.