To Sell Or Donate, That is the Question!

Consider donating your car to charity over selling it. There are several reasons to do this and depending on your circumstances you can decide which avenue is right for you. Many charities accept all vehicle donations, whether running or not, including: cars, boats, trucks, RVs and more. So your car doesn't even need to be functional to have someone haul it away for you! However, if you want hard cash instead of a tax deduction than this isn't the angle for you.

When you submit your car for donation you help out others, which is a great and easy way to provide service. Some organizations have special needs people that restore and provide maintenance on vehicles and this gives them a way to learn a trade while being functional in society. A good question is, "if I donate my car how much can I get as a tax deduction"?

A car donation to charity can be a great way to get a deduction on your taxes. Thanks to new tax law that went into effect in January 2005, the IRS has taken the guesswork out of determining the value of your car.

As of January 2005, you may deduct the full price the organization receives for the sale of your car. This greatly simplifies the process for you, the donor, because you no longer have to research and come up with an estimate of the fair market value of the car or other vehicle.

This also eliminates the risk of you getting into trouble by overstating the value of your deduction on your tax return. You'll know exactly the amount you may deduct, eliminating guesswork. This saves you both time and risk.

The IRS allows you, the taxpayer, to claim a tax deduction of: 

• The value of your vehicle up to $500 or
• If it sells for more than $500, you will receive a notification stating the exact amount for which it sold, which is the value you state for your tax purposes.
• Fair market value in some cases for certain vehicles. For example, late model cars or vans that end up being used to further the work of our charity OR vehicles on which they make a significant material improvement such as a major repair, before selling it.

In any case, you will receive a receipt at the time that your vehicle is picked up.

Assuming that they sell your vehicle for more than $500, they will then mail you a notification stating that value for your tax purposes. So for any vehicle sold for more than $500, the exact amount it is sold for will be stated on your notification mailed to you, which in turn will be your tax deduction.

Organizations such as Donate Car for Charity provide fast and free pickups of your car donation nationwide. There is never any cost to you, the donor. You can also find information to market your car for sell on various sites if donation doesn't work for you.

Again, you need to choose which alternative is best for you. However, donation of your vehicle gives you money on the back end in the form of a tax deduction and provides a great service.