Car donation info

Many questions face a first time donor of a car. Some of the critical ones that a donor has to understand thoroughly before donating a car are:

Why should I donate a car? The donations are made with the intention of helping the needy people such as aged people with no family support, destitute children with no family to look after them or people suffering from diseases. A donor can survey the local area for charities that support such causes as child education, cancer therapy, and alcoholic's rehabilitation and so on.

What's in it for me? While philanthropy is the main reason behind any donation to a charity, in case of car donation there is an additional benefit of getting some tax deductions. Therefore a donor gets the double benefit of feeling good on helping some one in need and also saving some tax!

Whom should I approach? While some charities do take direct donation of cars, many of them are small and cannot afford their time, money or efforts in sourcing the cars, auctioning them, completing the paper work etc., Hence a donor can approach car donation centers, third party intermediaries who channelise the donation efforts to help the charities and the donors. They do of course charge for their services but in the end it is a win-win situation for every one.

What should I check before I donate? The credentials of the charity as well as the car donation center. There are times when the charities & donation center do not act in the best interest of the intended beneficiaries. There are cases where the donation centers take away 90% of the sale proceeds of a donated car and leave the final beneficiaries with pittance. Also check for the registration of a charity under the 501 (c) (3) section with the IRS. If a charity is not registered, then you cannot claim tax deduction on the amount donated to them.

Where will I get the information on charities? Local branch of Better Business Bureau, the internet or even the IRS can provide the details of a suitable charity near you. The key thing is to find a charity that is helping the section of people you empathise with.

What kind of tax exemption do I get? It depends on the end use of the car by the charity. If a charity uses the car for its own activities you can claim the deduction on the fair market value of the car. On the other hand if the charity sells off the car in an auction, you can take a maximum benefit of upto $500 for deduction purposes. If the car's value (FMV) is appraised by a professional and is more than $5000 you need to compulsorily append the valuation report to your tax returns.

What is the time taken for a donation to be completed? Usually it takes anywhere between 4-6 weeks for the process. Year ends, peak seasons take some more time. It is advisable to plan well in advance of the tax return filing time so as to avoid the disappointment of not being able to claim the deductions. One should also be careful to ensure that the charity provides them with the car donation certificate mentioning all the details of the transaction such as the amount realized from auction, car's appraisal report, transfer of title etc.,

When a donor follows all the above steps judiciously he or she can be sure to be satisfied knowing that their well intended help has indeed reached the right people.