Benefits of Car Donation in Taxes

If you want to get rid of your old car, you can donate your car to charity. It is very easy to donate your car by making a call to the charity that accepts old vehicle and they will tow your car from your home.

The main question is arising that you may get tax benefit from this car donation or not. Yes, a car donor has got benefit in taxes. The car donor deducts the entire fair market value of the donated vehicle from their taxable income and thus he has to pay fewer taxes.

But due to the greediness of some tax payers who claims very high market value of their old vehicles, The Internal Revenue Service (IRS) tightened the rule on the car donation deduction. The tax payers deduct the fair market value of the donated vehicles under some specific situations. It is very necessary to know the fair market value of the donated car before applying for any deduction.

Rules of IRS from which a Tax payer can get the maximum deduction from car donation: -

1. When a charity auctions the donated car for 500$ or less, the tax payer can claim either the fair market value or 500$, whichever is less.

2. When the charity aim is to make a "important intervening use of the vehicle." This means the charity will use the car in its work, such as delivering meals to needy people.

3. When the charity intends to make a "material improvement" to the vehicle, which is "anything that increases the car's value and prolongs its life," Midwood says. "It can't be a minor repair or maintenance; it must be something like fixing the engine or systems that run the car," she says.

4. When the charity gives or sells the vehicle to a needy individual at a price significantly below fair market value, and the gift or sale is part of the charity's mission of helping the needy who need transportation.

The IRS says that the larger deduction is given in the cases where a charity gives the donated vehicle to a needy person for the purpose of transportation or sells it for a price which is considerably below market value.

It is very important to make sure the vehicle did indeed go to a needy individual. The IRS discovered after the vehicle donation rules changed that some charities sold autos at auction but reported that they sales at prices well below market value to trigger the exception that allows the donor a higher deduction amount. If the IRS discovers such false reporting, it could totally disallow your donation and deduction.

Donate car to charity in California

If you have face problems with your old car and planning to purchase a new car, but worry about the parking of old car. You did not get the space of parking your old car. The best way of disposing old car is to donate them and one of the best places for car donation is the state of California.

The best alternatives for the people who have old vehicles are to donate car in California. People can donate their four wheelers such as cars, vans, jeep, and boats etc to a charity institution in California of their own choice. This is the best method of getting rid of an old and useless vehicle without facing any trouble and also feels the happiness of helping the poor and needy people.

The main thing about donating a car is that it does not need to be in very good condition. You can also donate your broken car to the charitable institution. The people from this institution will came and tow the car for free.

Another way of donating car is by giving it to a poor family. According to the research done by A non-profit agency, The Surface Transportation Policy Project (STPP) make a survey that more than twenty two percent of the American poor families can not able to buy a car and spending large amount of their income in transportation.

There are advantages in donating your ride in California. In other states, you are required to have the original title in order to donate. This is not the case here. In fact, as long as you are the legal owner of the car, you can still donate. The Center for Car Donations would provide you with a duplicate title form to be signed. On the other hand, car donors are entitled to a tax deduction. This is in accordance with the new tax law of 2005. In some cases, you are given a free vacation for your act of charity.

Another benefit of donating car in California is the free towing services offered. You're not required to bring the car to the Center for Car Donations. They are ready to pick it up especially if it is not in good running condition anywhere within the state.

You simply follow steps in giving out your car. First, prepare the vehicle. While it is not necessary for the car to be in good running condition, it would still be good if you make sure that it is presentable enough. Simply clean it and make sure you have nothing of your personal belongings left inside.

You also need to prepare all the important documents like registration and insurance. If you don't have the title, the Center for Car donation would provide you with a duplicate title form. After gathering all the documents to be transferred, make an online search for car donation companies that would facilitate your car donation. Make sure that the company is valid before submitting all the documents. This would prevent you from falling victim of scams.

When the car is picked up, the company would give you a tax form. This is important for you to avail of tax deduction. Make sure to file a notice of release of liability to a local Department of Motor Vehicle (DMV). Ask the people who picked up your car on how to fill out the form. Lastly, inform your insurance company that you donated your car to charity. Do this on the day you release your car. This is important for them so they can discontinue the insurance coverage.

Car Donation - A Noble work

Donate a Car is a very good way to provide help and support to people who want help from the society. You can donate your old car and receive blessings from the people. We have seen that people keep their old car in their home which occupy space and one day the car become defunct and on use of it. For those people car donation is the best alternative. It is not necessary to donate car in good condition, people can also donate the useless car or the car which is not in running condition. If you want to donate money through your old car, options are also available for this. Many charitable trust and social bodies make arrangement for auction of cars and used the money for noble cause earned by the auction. You can receive the donation receipt after donation.

            We know that there are many Poor families which are not in a condition to buy a car due to their financial position. People spent large amount of money in transportation. Your donation will help them to purchase a car. Charitable Trust and Social Bodies provide car to the poor people at very reasonable price or free of cost. The poor families are also happy as they become the owner of a car.

            You have not done anything for car donation. Just make up your mind for car donation and contact the trust through telephone or email. People from the trust come to the home and collect the car. The only thing you have to make ready is the registration and insurance paper of the car. if you have any problem in this, the trust will also help you to clear all the papers of car.

            When the people came to collect the car, don’t forget to receive the tax form from the trust. This tax form is very important for obtaining tax deduction.

            If you are donating your car, you are doing most rewarding work. You friends and family must be proud of you as you help the people who are poor and are not able to fulfil their dreams. In this world, there are many people who do not have food to eat, many children not able to go school. By donating our car we can help alteast some of them.