There are many individuals who like to donate their cars rather than selling them. It can be to eliminate clutter, help their community, or to receive a tax deduction. Car donation charities usually accept cars, SUVs, motorcycles, and trucks. Though it is confusing to decide the charity that is best for you, there are two major factors you can consider while donating a car: how the donation will benefit yourself and how it will benefit others. In this article on car donation charities information will be given on the benefits of this program and all the relevant details.
Car Donation: Benefits to You
The basic motivation behind most of the car donations has been found to be selfish, such as:
- Old cars may be taking so much of space in your garage or driveway
- Fixing it may need more money than what you are interested to invest on it
- You do not need the vehicle anymore
Car donations offer a range of benefits for donors. You need to act wisely while choosing the right car donation charity.
Most of the car charities use the cars for practical advantages, instead of selling them for a profit. Some charities sell all the donated cars. These funds are used usually for a good cause.
You can include car donation in your charitable contribution deduction while donating a car to charity to save on your taxes. However, you can maximize the tax benefits with little planning.
Step 1: Finding Out How Much The Car Donation Charity Sold Your Car For
You need to use the car price that the donation charity obtained for your car as the amount of your car donation deduction. For instance, if the car donation charity sells your car at an auction for $2,000, your car donation deduction will be limited to $2,000 even though the fair market value for the car is $3,500. However, if the car is sold to a needy person or the charity keeps your car for its practical use, then you can claim a tax deduction for car’s fair market value.
Step 2: Find Out Fair Market Value Of Your Car
The Internal Revenue Service (IRS) recommends you to use a sound used-car price guide to determine your car donation deduction when finding a fair market value for your car. For instance, you can go to a local library and find a used-car pricing list guide. Search for the private party pricing list for your car based on its make, model, year, and overall performance. You can do this search on the web as well.
Step 3: Claim the deduction
You can report the amount of your car donation deduction on Schedule A – line 17. As you will be able to claim only a deduction for the car donation when itemized, the total amount of all the entitled expenses on Schedule A should go beyond the standard deduction amount for the filing status.
Step 4: Additional required forms
You need to fill the form 8283 if the car donation deduction crosses $500. It is must to fill Section A if your car donation deduction is in between $501 and $5,000. You must fill Section B if the deduction is higher than $5000. You should obtain a written appraisal in case of filling Section B.
- If the donation charity sells the car for $500 or lesser price, you can either deduct $500 or the fair market value of your car, whichever is lesser. For instance, if the market value of your car is $500 but sold for only $350, you can deduct $500.
- Most of the car donation charities will report the car sales price to you on Form 1098-C
- You should have a documentation of your donation. The minimum information that the documentation from the charity should include: your name, date of donation, vehicle identification number. Also the services and goods you received, if any.
Car Donation: Benefits to Others
Another common reason for car donation is to help others in the community. Many families in rural, urban, and urban areas throughout the nation have very limited opportunities because of not having a car or any other vehicle. Relying on public transportation leads to longer commutes. It further leads to less time, less energy, and less sleep. Especially to a parent, any of these limitations can take a toll.
The scenario explained above is the right example of a lower-income family – in most cases. Most places in the U.S do not provide consistent public transportation. Many lower-income families, especially parents, work in service jobs that come with odd working hours. For early morning and evening shifts, catching public transportation has its own share of challenges.
The longer, the travelling for such parents, whether they run or walk to work, deeply limits their capability of caring for their family. Though many of such parents are qualified for well-paid jobs, they do not access the opportunities mainly because of lack of proper transportation. This will result in leaving themselves stuck to the same position that never pays them what they really deserve.
Opportunities for such parents for in-job advancement can also be limited. Particularly, lack of proper transportation may lead to irregular arrival schedules that are not accepted by most supervisors. Some of the jobs may even require a private vehicle for the job advancement, especially when it is a field work – such as medical representatives and marketing executives.
When gifted with affordable cars that offer a minimum of 2 years service, the lives of such family will change gradually. With considerably increased transportation facilities, parents will be able to drop and pickup their children at schools/colleges. They will also be able to spend more time with their kids and take major steps out of poverty line with their increased job opportunities. Parents who have cars will no longer have to be unemployed or underemployed – which will allow them to be happier and healthier parents raising happier and healthier children.
Best Humanitarian Traits: Donate a Car for Healthy Families
While choosing to donate a car for charity, you are actually doing more than simply offering workers with a reliable transportation and helping them increase their chance of making a better living. Your kind contribution is offering low-income parents with the capability of offering their children fresh food they require to stay fit mentally, develop physically, and grow as healthy adults.
The inter-relationship between poor food supply and negative health results has been well documented in the recent years. However, many lower-income families stuck to the circumstances. So when you are donating a car, you are offering a poor family with the tool that it needs to improve their family’s health and ultimately improve their lives.