Some Things To Remember Before You Donate Vehicle To Charity
When you want to donate vehicle to charity, you must take a few things into consideration. This article will lay out all the important details you will want to consider when making your decision on how to donate vehicle to charity.
Choose a charity
The primary consideration for when you want to donate vehicle to charity is the choice for your charity. Remember, charities will be selling your car, often times for less than fair market value. In return, they get much needed cash that they then use to fund their charitable operation.
It is very important that you make your donation to a charity you like and respect.
Is it a 503(c)?
Another consideration to take into account is whether or not the charity you choose has been approved by the Internal Revenue Service as a 503(c) entity. This means that the IRS considers this to be a valid non-profit business that gets special tax treatment. What this really means to you is that you will get a tax deduction for donating your vehicle to this particular charity. If your charity is not a 503c, then you will not get the tax break.
Keep all of your paperwork
It is imperative that you keep good records of your donation. Take note of the vehicle make, model, and year, as well as the Kelly Blue Book value. Jot down the date you donated your vehicle. Write down to whom you donated it.
Ask the charity to notify you when they sell your car. You will need to know how much it was sold for because this will become the amount of your tax deduction. You may have to call the charity periodically, as the staff there probably will not remember to call you when they sell your car.
If the charity keeps your car (i.e., does not sell it and instead uses it within their operation), you get to write off the fair market value of the car. This is why you wrote down the Kelly Blue Book value.
You should also take photos of your vehicle before you donate it, too. Doing so will help you validate the fair market value of the car, just in case the IRS has questions about the value you claim for the car.
Transferring title
When you donate vehicle to charity, make sure that you immediately file with your state Department of Motor Vehicles the proper paperwork. In most states, the most important document is the transfer of title.
You want to ensure that you transfer title as soon as possible after releasing the car to your charity of choice. Doing so removes liability from you and places it on the charity when you donate the car. If the charity somehow parks the car illegally, for example, you do not want the parking tickets!
Filling out the form is quite simple. Fill in all of the blanks; most importantly, always fill in the name of the party to which you are transferring the title. Some charities may want you to leave this blank because they want to simply take the title form and give it to the new owner when they sell it (most charities want to sell your car for you as fast as possible because they need the cash—not the car).
Do NOT do this. Fill in the charity’s name as the entity to which you are transferring title. You want to remove yourself from any liabilities that may be incurred once the vehicle leaves your possession.
Notify your insurance company
You certainly should notify your insurance company as soon as you donate vehicle to charity, too. You may be able to get a refund on any remaining premiums that you have paid on the car. However, more importantly, you want to alert the insurance carrier that you no longer own the car and that anything that happens subsequent to your transfer of title to the charity is not your responsibility.
Arranging pickup
Many charities, such as the American Red Cross, will make donating your vehicle quite a simple affair. They will arrange to pick up your car (they can even tow it if your car is not running), fill out all of the paperwork, and take your car off your hands. Charities have found that if they make the process quick and easy, they get more cars donated.
They need these donations! Without donations, charities will perish, causing them to under-serve the people they want to help. In the past few years, many charitable organizations have discovered a great way to increase its coffers (and consequently make more resources available to their constituents) in encouraging people to donate their vehicles rather than selling them on the open market.
In effect, charities have become used car salesmen! They take your car and sell it for you. In return, they get to keep the cash and you get a nice little tax deduction. Additionally, you get the satisfaction knowing that your car, which you no longer needed, went to a good cause. Plus, that tax break you get might be worth more to you than you could have gotten by selling your car.
Selling a car, after all, can be quite a hassle. You have to place an ad, arrange to meet potential buyers, and deal with people who want the best price possible. This price may be far from what your car is worth, too. You can rest assure knowing that the charity will try to get the best price possible because they need the cash—and that sales price will be your tax deduction.
When you donate vehicle to charity, you eliminate a lot of the inconveniences of trying to sell the car yourself. Since many charities nowadays make it so easy to donate your vehicle, you may as well let them. Doing so really is a win-win opportunity.