Why you should donate
Many of us want to avoid the hassle of selling our old pre-owned luxury car privately. We are disgusted by the low trade-in value from a dealership and are tired of paying insurance and licensing on a car you rarely use. These are all reasons why you might consider luxury car donations to charity.
Most non-profit organizations have established programs for luxury car donations to make it easy for you to receive a tax deduction. In fact, luxury vehicle donations are more common than you might think. About 16 percent of taxpayers in 2000 claimed deductions for donated vehicles, according to CNN.com.
Who to donate to
If you are interested in car donations but you can’t decide which charity you want to support, you can visit www.specialkidsfund.org to learn about their missions. You can also use this site to search your own state for local charities.
Most charities will sell your car and pocket the proceeds, using the profit to further their missions. At www.donationonline.com you can arrange for a “fair market value” tax deduction and they will pick up your car at no cost to you. However, there are a few specific charities that will use luxury auto donations to help someone in need, as long as the car runs, of course.
Some organizations sell cars they receive from car donations at online auctions, such as eBay. When this happens, you get the maximum return on your investment from your donations. This is because the largest charitable benefit is created for the charity because no percentage of the donation goes to a third party seller.
For example, www.donate-car-for-charity.com donates vehicles from luxury car gifts to help provide humanitarian development and humanitarian relief in more than 50 countries.
Keep your eyes open
However, not all charities are alike, and some use your car donations differently than you might expect. Officials suggest an eyes-wide-open approach when it comes to donations, according to the IRS Web site.
“We urge the public to take the proper steps to find out how their contributions will be used,’’ said Karin Kunstler Goldman, president of the National Association of State Charity Officials (NASCO) and an Assistant Attorney General in New York State. “Any reputable charity should be happy to provide potential donors with financial reports and other information about its activities.”
Valuing your car
The Internal Revenue Service allows for car donations to be tax deductible, but remember that you have to itemize your deductions in order to take full advantage. Additionally, the IRS reminds you to get a qualified, written appraisal for your luxury car donation if it is valued at more than $5,000.
The potentially tricky part of a car donation is determining the value of the vehicle. The IRS allows you to donate your luxury car at “fair market value.”
Do your homework
In a press release, IRS Commissioner Mark W. Everson encouraged people to proceed carefully when participating in luxury car donations.
“Supporting charitable activities through tax deductible contributions is an important element of tax law and serves the national interest,” Everson said. “A few simple steps can help avoid headaches for taxpayers.”
The IRS provides eight steps for luxury car donations at the following Web address: www.irs.gov/newsroom.
By Aaron McCullough