Auto Donation – Before You Donate A Car To Charity
Are You Considering Making A Charitable Car Donation?
If you are deciding to donate a car to charity, you probably want to know how much it will be valued at. This requires you to fairly assess what purpose it will likely be used for as well as its true condition.
When consulting the Kelley Blue Book for a generalized appraisal value, many people fail to consider that even a “poor” rating assumes that the car can move without facing downhill and that it’s capable of getting current tags in the state that it’s registered in.
Of course, by the time many people even think to make a charitable car donation, they’re often far beyond this point. Indeed, since a great many charities (or their third-party, for-profit agents) will more than happily send someone to pick up vehicles that haven’t run under their own power, you can be assured that even the scrap metal has more value than you might think.
Charitable Car Donation
Finding The Value Of Your Car
The first thing to do is to take a look at the Blue Book value, for private party sales. This is the value you can expect to get when you put an ad in the paper and try to sell the car yourself. Before you donate a car to charity, you need to know what other people are paying for it before you get any grand ideas of whittling your tax bill down to nothing.
There will be a section by where you answer a series of specific questions about the condition of the car. You may be surprised just how a few small dings can really impact the resale value whether or not you choose to donate the car. Charity organizations, of course, have the same access to these figures as yourself. So, be honest. If you come up with a condition that is less than “poor,” odds are you’ll have to settle for the paltry sum the auto will pick up at the wholesale auctions.
Is Your Car Donation Scrap Metal?
Unless you’re able to find a charity that will use your car as a car (rather than scrap metal and parts), you’ll have to accept that the charity you choose will get only 30-50% of that revenue after the price of towing is figured in.
If, on the other hand, you’re able to find a charity that has a training program to teach young people the mechanical arts, perhaps there is a way to get a bit more for your car. However, if you’ve got a terrible clunker, you probably ought to forget it. There’s no point in fixing something up if it has no chance of being either valuable or cool.
It may take a while, but after as many as nine months, you’ll get a slip of paper informing you of what your donated car at charity auction sold for and netted the school you donated it to. Colleges are also able to receive auto donations that will be refurbished and resold, to your mutual benefit.
It is also useful to consider that you may receive a higher deduction value if your car is refurbished and donated to a needy individual or family in the area. Some cities run programs like this and are even able to accept should you donate your car to the charity of you municipal government.
Organizations that teach people basic car maintenance and body work are probably not as interested in fast and swishy-looking cars, but will take a serviceable vehicle that has very little wrong with it. If you happen to know what the problem is, all the better, as it will give the charitable organization or NPO something to base a decision upon.
So, consider the value of your car when it’s been fixed up, both a little and a lot when you’re deciding what to do when you donate a car to charity Though not a credit to take off your total tax bill, deductions reduce the income you’re to be taxed upon. The actual amount of money you’ll save (or be refunded) is dependent upon your tax bracket.
However, by taking some time and effort when you donate a car to charity, you can vastly increase the amount of money your car is worth as a deduction under the new IRS rulings affecting auto donation and deductible amounts.
The Changing Face of Who Will Donate a Car to Charity
Though the average person who was liable to donate a car to charitable organizations once included just about everyone in the late 1990s and early ‘aughts, changes in IRS regulations and rules governing deductibles since 2005 has made for a subtle demographic shift towards the upper-middle class with regards to just who will donate a car to a charitable or non-profit organization (NPO).
This is true for several different reasons. For starters, those who are self-employed are far more likely to take itemized deductions since such workers have far more upward mobility than a given employee, they also tend to make more a lot from such ventures. Self employment also means that you pay your own contributions as well as those normally picked up by an employer. This double taxation leaves many of the self-employed on a constant lookout for deduction possibilities. When you donate a car to charity you can make up several thousand dollars at a time in deductions – sometimes enough to bump you into a lower bracket.
Of course, not everyone who wants to donate a car is interested in the deduction. There will always be people who just want their old junker cars to go away and many of the ads imploring you to donate a car rely upon the offer of free towing (and sometimes a hotel or cruise voucher) to help get low-value cars from far less off individuals than the PhDs who are donating perfectly good cars.
However, in yet another installment of how it pays to have a few extra coins to rub together, those who are able to afford to give a working car that is likely to be used for transport rather than sold at wholesale auction. This other type of use occurs when you carefully choose a charity you trust, donate a car to it and find out 3 years later that it’s been used for various official functions and as transport for in-house needs that furthers the mission of the charity.
As such, those who already have some extra money to throw around are more likely to get the higher deductible that they’re more likely to be able to capitalize upon in the first place. That means the demographics of someone looking to donate a car have somewhat suddenly moved back to where they were before the advertising push of the 1990s. Though many middle class people might donate a car that doesn’t run very well, they won’t enjoy the higher level of benefits that a better quality donation typically garners.
But other than wealth, the other demographics of those who participate in charitable organizations when they donate a car include many of those who grew up or recently used the services of such an organization. This is gives one a good idea as to how non-monetary benefits work in the real world. The chance to give back to an organization that has helped one get back on their own two feet is an invaluable feeling of pride and accomplishment that the IRS cannot put a value upon.
So, despite recent setbacks in deduction amount for the typical donation from a mid-level income individual or family, this hasn’t stopped a segment of the population from donating scrap cars that they simply want hauled away as junk. This is especially true in the case of vehicles that have no chance to have a useful resale value whether conducting the transaction yourself or letting a car donation service take care of it.
The main difference between the classes of donation that have sprung up since the 2005 ruling means that if you choose to donate a car, it may not be very lucrative for the charity in question unless it’s running well and worth their while to fix up for use (rather than selling on the wholesale market), even if they don’t use a third-party donation agent.
