It may not be in your best financial interest as far as basic economics are concerned, when making an auto donation, whether that donation is a truck, car, RV. Of course, charitable giving is it’s own reward for most, but if you actually consult your accountant, you may not enjoy any additional incentive in the form of a tax deduction, as is typically offered for most auto donations. If your auto donation is worth more than $5,000, you should consider your actual benefit to accurately judge whether it is wise to donate your vehicle.

When you file your tax return for the year that you donate, you’ll need to file with itemized deductions, rather than taking the standard deduction. This can work against you if you have not rolled much of your money back into living and working expenses. Typically, itemized benefits are most often used for the self-employed since so much of their income is reinvested back into their livelihoods in the form of expenses. As well homeowners with a lot of taxes typically use itemized deductions. A young person just entering the workforce as a low wage employee may find it difficult to account for enough expenses when figuring their taxes.

You need to consider the cost of hiring a tax accountant if you don’t want to bother with all the receipts and calculations. Though many people could save money from itemized deductions, often they are not interested in doing a detailed tax return. The price of using a tax preparer as found at H.R. block for instance, is low enough that a large percentage of those in the USA use them each year, but with widely varying results. A little research on your own might give you the answers you need to file a detailed tax return accounting for a vehicle donation.

Auto donation is also a type of charity giving that is motivated by your desire to see the charity in question, one with whom you presumably have a particular belief in, get as much of that donation as possible. Of course, the amount you are able to deduct from your taxes also differs. Both figures are dependent upon whether you want to give your auto donation to an online or third party organization.

By taking the time and effort to find a charity that can benefit from your auto donation, you can increase the percentage of your auto donation that will be given to the charity and your own deduction. The downside is that this requires time and effort on your part. This is especially true of higher value auto donations.

Third-party donation organizations are able to offer services such as towing and a quick sale, though sometimes this sale is at a lower price than you could have gotten if you’d managed the sale yourself. The price one pays for this convenience is overhead for the third-party organization.

Some states, such as California, regulate how a third-party donation service operates, stipulating that certain amounts of the proceeds are given to specific purpose. Other states have similar laws and statues. You should find out if the auto donation service you plan on using is registered to practice in your state or if they have complaints against them. Any complaints against an auto donation service should be on file with the state Attorney General’s office.

It is always wise to consider selling the car yourself rather than relying on an auto donation service. Such donation services can consume nearly 70% of the sale price of the car in overhead costs. Even if you sell it quickly yourself, without repairing it for the sale, you can still expect far more of your donation to go to the charity you have chosen. Often, one can contact the charity themselves with a cash donation after doing some research into the non-profit organization they’re interested in supporting.

In short, you should consider your motivations for any auto donation and balance that with your time constraints and personal financial gain in the form of a large charitable deduction on your taxes. Remember that deductions are taken off your taxable income, not the tax due. So it is not 1 for 1,or dollar for dollar. The relative worth of such a donation depends upon your tax bracket as well.

All auto donations are appreciated and raise money for worthy causes, but there are great differences in the amount of relative value to you depending upon whether you conduct the donation yourself or use a third-party auto donation agency.

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Tags: auto donation, auto donation and taxes

This entry was posted on Saturday, July 26th, 2008 at 11:17 pm and is filed under Taxes And Auto Donation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.