Used car donation

To donate or not to donate? That is the question facing many people who own an old car that is on its last legs, no, wheels. As the vehicle gets older it no longer serves its owner a good purpose, sometimes it becomes a burden to maintain. In such cases, the options are fairly limited. You could sell it off at a used car show room, give it away to a friend or a family member (who may not like the idea in the first place!) or simply leave it in the junk yard.

But none of the above ideas is as good as used car donation. This is one option that has been catching the fancy of thousands of people all over the US. It offers many advantages to the troubled owners of the old cars. The main benefit is the opportunity of getting a tax deduction on the sale proceeds of the car when it is donated to a charity. The IRS rules are quite specific and describe in detail the available tax exemptions and the process to be followed.

The key element is to identify a suitable charity. The charity has to be compulsorily registered under the section 501 (c) (3) and must undertake only those activities for which the registration has been obtained. There after, the concerned charity can hire a third party agent for carrying out the process of collecting, auctioning and disposing off the old cars donated by the people.

The responsibility of ensuring a fair and transparent auction process lies on the charity itself even when it engages a third party for the job. They must see to it that no undue benefits accrue to the members of the board of the charity; no private parties make extra profits in the process. If any of the above irregularities occur, the charity is in danger of losing its exempted status.

Instead of opting to sell a car, a charity can use it for its own charitable activities which can include providing transport to the needy aged citizens, school children and such uses.

The donors of such cars have to obtain a written acknowledgment of donation from the charity. This document is vital if the donor has to obtain the tax exemption from the IRS. Therefore, if a charity wants continuous donations, it should make it a point to give the acknowledgements to the donors in time. This acknowledgement can be either a physical paper document or even an email confirming the donation.

The prospective used car donors must first check the eligibility norms for the tax exemption and also be aware of the "fair market value" as assessed by the IRS. Typically the values of used cars indicated in some used car guides are much more than the fair market value. If a car donor mistakenly assumes that he or she will get the higher deduction based on the used car guide, then he or she will be incurring a loss (because the entire value is not tax exempt).