Auto Donation and Tax Benefits Bangor ME
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Auto Donation and Tax Benefits
Auto Donation and Tax Benefits By Alison Lakin, Associate Editor
Donating your used vehicle is a noble action; you are helping charities raise funds for people in need or giving a car to a family who can't afford one. These benevolent feelings are only enriched by the tax benefits you receive from the effort and can make donating your car to charity seem like a no-brainer. The decision may be the easy part, but the actual donation and tax deductions can be a little trickier. With the following advice, we hope to make donating your used auto an easier process.
Do a quick Google search and you'll find there are many middleman companies that offer to aid you in your vehicle donation. These organizations will collect your car via pick-up services, sell it and then give the earnings to the charity of your choice. Use them if you want to lessen your time spent organizing the donation but be aware that they might take a percentage of the sell price - possibly up to 50% of the net profits - for themselves. To avoid this, a donation directly to the charity might be prudent.
By going through the charity's services, you will ensure your donation arrives safely and that they keep all the proceeds from the sale. A simple way to find out if your particular charity allows auto donations is to call them or to perform a search for 'donate vehicle' on their website.
The physical donation experience doesn't actually take very long. Once you decide who's getting the auto, you'll need to fill out any required forms and send them in via the company's preferred method. You'll then be contacted by the charity or the transportation service and will be able to arrange a convenient time for you to have your vehicle picked up.
At pick up time, you'll turn over your title. Make sure to get a receipt or you'll be kicking yourself come tax season. Luckily for some of you, your car does not have to be running for you to donate it. Though, similar to donating your clothes to Goodwill, the car must be whole, with potential usability - no missing engines or car doors. Sometimes charities or third party companies might make exceptions, but don't count on that.
The tax deduction part of the donation experience is slightly less pleasurable than watching your old car being towed away forever. As usual with the IRS, the tax benefit stipulations are somewhat convoluted, but the basic rule of thumb is this: the tax deduction is based on the selling price of your car at auction. This applies to cars that sell for over $500.
Imagine your car sells at auction for less than $500. You can then claim the value of the vehicle up to $499. If this occurs, make sure to get a written acknowledgment of the donation with the charity's name, a description of your vehicle and a statement that the donation wasn't in exchange for anything.
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