Donate Used Cars for Charity
Many of you will have heard of car donation charity programs whereby you can donate your used and unwanted old vehicles to a charity and in return be eligible for a tax deduction with your annual tax return.
Understanding the Process
As the act of donating a car to charity becomes increasingly popular and more charities decide to use charity donations of vehicles as a way of fundraising for their causes, the process of car donation has too become more complicated.
Today the process of donating a car or vehicle to charity does not simply involve you and a charity but can be run through any number of third party agencies and dealerships.
Many charities are too busy with other activities to be directly involved with the acquisition of car donations, so they instead chose to employ dealers or agents to act on their behalf.
Understanding how the process works and what the charity intends to do with your vehicle is a good starting point when looking to donate used cars to charity. The process will usually work in one of these four ways:
1. Sold direct by the charity
In this case if you donate used cars to these types of charities the cars are sold directly by the charity themselves, allowing them to keep 100% of the profits. Some charities choose to do this by owning their own car lot dealerships, running auto auctions or by placing advertisements on online sales websites like E-Bay.
Most donated cars that are still in a good working condition and are sold through these methods will fetch between 70 to 90% of their true market value.
2. Processed through a third party agency
Some charities like to focus their attention on the administration of the charity itself, instead choosing to run their car donation programs through a third party dealer or agency. In this case the sale of your used car is passed onto auto auction companies or sold onto a dealership through a flat fee arrangement.
If you have decided to donate through an agency you will be asked to select a charity from their list of benefactors, which will then receive the profits from your car. This is one of the most popular ways of operating a car donation charity but you need to beware of dealerships and agents that may trying to scam you by not passing on the full sales of your vehicle.
3. Sold for parts
If you want to donate used cars that are no longer roadworthy or in working order, you still can, even if they have been sitting there for years. Almost all car donation charities will accept bust and broken down cars which they can then sell off to scrap yards for parts. As long as the value of the car will offset the towing costs it will be accepted for donation.
4. Fixed up and donated
Other used cars that are not completely out of order can be restored and donated to people in need of used cars and transportation. Other educational charities may donate these vehicles to mechanical training programs.
Charity Donation Tax Deductions
Car charity donations have traditionally been viewed as a way to claim a tax deduction and reduce the amount of taxes you have to pay. In the year 2000, over 700,000 taxpayers reduced their taxes by $654 million dollars in the United States alone, causing a surge in the number of charities using car donation programs and an increase in the number of people using these programs to dispose of their used cars.
Today the legal requirements for car donations limit the amount of money that can be claimed back as a tax deduction. If your car sells for up to $500 it is up to you to determine the market value of the car and you can claim this amount in full as a tax deduction.
However, if your car sells for more than $500 you can only claim the amount that your car sells for. To do this you will need to itemise your deductions on your tax return and provide proof of these, so be sure to keep the sales receipt that should be provided to you by the charity on sale of your donated vehicle.
Make a Difference
Donating a car to charity will not only make you feel good but think about the benefits it can have. By giving your car as a charity donation you can help local children in your community, contribute to cancer research or support any number of environmental causes. Car donation really is the most ethical alterative to selling your car on for a small profit.
Understanding the Process
As the act of donating a car to charity becomes increasingly popular and more charities decide to use charity donations of vehicles as a way of fundraising for their causes, the process of car donation has too become more complicated.
Today the process of donating a car or vehicle to charity does not simply involve you and a charity but can be run through any number of third party agencies and dealerships.
Many charities are too busy with other activities to be directly involved with the acquisition of car donations, so they instead chose to employ dealers or agents to act on their behalf.
Understanding how the process works and what the charity intends to do with your vehicle is a good starting point when looking to donate used cars to charity. The process will usually work in one of these four ways:
1. Sold direct by the charity
In this case if you donate used cars to these types of charities the cars are sold directly by the charity themselves, allowing them to keep 100% of the profits. Some charities choose to do this by owning their own car lot dealerships, running auto auctions or by placing advertisements on online sales websites like E-Bay.
Most donated cars that are still in a good working condition and are sold through these methods will fetch between 70 to 90% of their true market value.
2. Processed through a third party agency
Some charities like to focus their attention on the administration of the charity itself, instead choosing to run their car donation programs through a third party dealer or agency. In this case the sale of your used car is passed onto auto auction companies or sold onto a dealership through a flat fee arrangement.
If you have decided to donate through an agency you will be asked to select a charity from their list of benefactors, which will then receive the profits from your car. This is one of the most popular ways of operating a car donation charity but you need to beware of dealerships and agents that may trying to scam you by not passing on the full sales of your vehicle.
3. Sold for parts
If you want to donate used cars that are no longer roadworthy or in working order, you still can, even if they have been sitting there for years. Almost all car donation charities will accept bust and broken down cars which they can then sell off to scrap yards for parts. As long as the value of the car will offset the towing costs it will be accepted for donation.
4. Fixed up and donated
Other used cars that are not completely out of order can be restored and donated to people in need of used cars and transportation. Other educational charities may donate these vehicles to mechanical training programs.
Charity Donation Tax Deductions
Car charity donations have traditionally been viewed as a way to claim a tax deduction and reduce the amount of taxes you have to pay. In the year 2000, over 700,000 taxpayers reduced their taxes by $654 million dollars in the United States alone, causing a surge in the number of charities using car donation programs and an increase in the number of people using these programs to dispose of their used cars.
Today the legal requirements for car donations limit the amount of money that can be claimed back as a tax deduction. If your car sells for up to $500 it is up to you to determine the market value of the car and you can claim this amount in full as a tax deduction.
However, if your car sells for more than $500 you can only claim the amount that your car sells for. To do this you will need to itemise your deductions on your tax return and provide proof of these, so be sure to keep the sales receipt that should be provided to you by the charity on sale of your donated vehicle.
Make a Difference
Donating a car to charity will not only make you feel good but think about the benefits it can have. By giving your car as a charity donation you can help local children in your community, contribute to cancer research or support any number of environmental causes. Car donation really is the most ethical alterative to selling your car on for a small profit.