Tax Benefits of Donating Cars for Charity

by Cars for Charity Team | Dec 27, 2018 | News and Updates

2018 is coming to a close but there is still time to take advantage of the tax benefits of donating cars for charity.

You can donate your car anytime but if you want to claim the contribution on your taxes this year you need to make your decision to donate your vehicle by December 31st.

One of the biggest factors in a donors decision to donate a car is the tax write-off. There are many different car donation programs out there so make sure you do your research on who you are donating to in order to make sure your donation will be eligible. At Cars for Charity we only work with registered 501(c)(3) nonprofits, meaning you can choose any charity you want to support and your donation will be tax-deductible.

Here are the answers to your tax benefit questions that might help you make your decision!

Question 1: What is the value of my car donation that I can claim on my taxes?

It depends on how much the car sells for – all of our vehicles are sold locally at an auction through licensed wholesale auto dealers. If your car sells for over $500, than you can claim the FULL selling price on your taxes. If your car sells for under $500, than you can claim up to $499 of the fair market value (which you can find here on KBB).

Question 2: After I choose to donate and my car is sold, what forms do I need?

You only need a special tax form if your car is sold for over $500. If it sells for under $500, we will send you a tax receipt which contains all the key information you need:

Vehicle VIN, Year, Make and Model
Date of Donation
Federal EIN
A statement that the vehicle was sold at arms lengths through two unrelated parties
A statement that no goods or services were provided in return for this donation

The form you need if your car sells for over $500 is the 1098-c tax form. It is simple enough though as we notify you of the sale price and ask for you to call in order to provide your social security number. We take it from there and complete and mail you your tax form.

If your car sells for over $5000, there is an additional form to fill out – Section B of IRS form 8283 and you may need an independent appraisal. Don’t let this discourage you from donating cars that still have a lot of value left though, we get car donations of antique and exotic vehicles all the time!

Question 3: If I donate my car at the end of the year but it isn’t finalized until after the New Year can I still claim it?

Even if your car donation isn’t finalized until next year, the tax benefit is based on when the donation is started. We will provide a tax receipt to you within 30 days of your vehicle being auctioned. So as long as you start your donation before your New Year’s Eve party you are all set!

Question 4: What else do I need to do to claim my car donation tax deduction?

Once you donate your car and receive the proper receipt or form all you need to do is itemize your income tax return.

So there you have it! If you own a car that you are interested in donating, take advantage this year of the tax benefits offered when donating cars. Visit our Donate a Vehicle page to start searching through our charity partners or to begin your car donation! You can also visit our Frequently Asked Questions page for answers to more helpful questions about transferring your title or how long it takes to pick up your car.

donate a car to charity before the end of the year to receive the tax benefits of donating cars

10 TIPS FOR END OF YEAR GIVING

by Cars for Charity Team | Dec 6, 2018 | News and Updates

As December quickly gives way to the New Year, we’re often asked about the best donation programs to support and ways to help Charities in a needy time. At Cars for Charity we’ve put together a list of things to do to make sure your charities dollars are best spent.

1. Estimate your Income and Tax Liability

Take time to understand your tax liability for the year. Did your unearned income increase? Did you sell any appreciated assets? The answers to these questions may determine how much you want to give by December 31st.

2. Get in Touch with your Advisor

After the new year, your CPA, attorney, or advisor will be neck deep in tax filings and returns. Now, is a great time to have a consultation to discuss contributions, retirement, giving options, and understand the impacts on your taxes.

3. Check that Portfolio

Consider assets that appreciated in the last year. If you sell or have sold assets you may incur capital gains on the appreciation. But, gifts of stock reduce the tax liability for the donor. These gifts can be deductible up to 30% of the adjusted gross income and may carry the deduction forward for up to an additional five years.

4. Beware of Fraudsters

Generosity this time of year also breeds a lot of deceptive practices and schemes. Be on the lookout for contribution programs that promise high yields or offer other incentives (like a trip).

5. Know your charity

Do you see the work of the organization in your community? Is the charity a qualified 501(c)(3)? Be careful about who you offer your hard earned money or assets to. Sometimes, they operate as sound-alike organizations.

6. Don’t wait till the last minute

Give early and make sure to have your donations complete or the interest transferred by December 31st.

7. Consider alternative types of Donations

It doesn’t have to be cash or stocks. Donations of property can make a big difference this season. More than coats and housewares, Car Donations make a huge difference this time of year. Roughly 35% of car donation volume comes in between October 1st and Dec 31st. If you have a Car, Truck, SUV or Van that you want to donate to a worthy charity, consider the donation program of Carsforcharity.net. We have the best run program in the Country!

8. Ask about multipliers

Often times at end of the year, charities may have challenge grants that can double your donation amount or employee matching programs that can make your single car donation into the value of a two-car contribution.

9. If you can invest time with your dollars, Do that.

Not only in the spirit of the season is this a great time to volunteer, but building a relationship with the charities you support lets you know the money is being used wisely.

10. ASK the Question

Don’t be afraid to pursue all the answers! Where is the money spent? How much goes to fundraising costs? Can I find your financial statements online?

Now more than ever, charitable donation organizations need to be ready to compete for your dollars. Donors should choose the programs that best fit their interests and passions. But, you should be sure that they are ready to make your donation count. Ask your friends not only where they donate, but where they spend their time.

It’s okay to have charities compete for even tiny donations! Don’t get caught up in splashy ads or promises. Resist organizations with ‘kids’ in the name! But no history of helping kids in the community. And remember it might be trash to you, but could still make a huge difference in someone’s life! A single car donation can be the difference between hope and happiness!