We all know by now that you can do nearly anything, especially financial, from the comfort of your home using your own computer connected to the internet.  Donating your car is no exception, and you can do it in your pajamas.  But you may get a different tax break than you expect.  The deduction you may be allowed to take for your donated car is limited by the way your vehicle is ultimately used after the donation.  You should be skeptical of anything that sounds too good to be true, especially when it comes to donating your car.  In fact, be skeptical about anything on the internet that sounds too good to be true.

Ever since 2005, a car donated to charity has been subject to stricter regulations with regards to the amount you’re allowed to deduct from your yearly taxes.  However, to read some of the online ads for car donation, you’d think nothing had changed.  Be skeptical.  Anytime you donate a car to charity online, there are now very few situations where you’re able to claim the full “fair market value” as a deduction.

Indeed, it can be difficult to know where to look to find high deductible options for donating a vehicle.  One place to start is in your local area.  Only charities and third-party agents of those charities who are dealing locally potentially want your car to use as a drivable vehicle.  When donated, a car going to charity that still runs is almost always best used when someone who will actually be able to drive it is the ultimate recipient of your gift.  In that case, since no actual sale has been made, you’re able to claim that fair price that you’d ask for as if you were selling it yourself.

Of course, if you just want to get rid of the piece of junk sitting in your yard, you may want to donate the car to charity in whatever manner is easiest and just take whatever deduction you can get.  Often this type of donation takes the form of a scrap-for-cash kind of transaction.  There are plenty of online resources to choose from if you don’t care about the deduction amount, many of whom make some wild claims about deduction.  So be careful.

If you just want to get your old car out of your driveway or yard you should pay attention to a few things.  There should be no charge for towing.  As well, the company you choose to donate a car to or through should have no problem coming out to wherever you are.  As long as your title is free and clear, you can often see your old auto towed away within a day or two of signing up.  It is usually a good idea to take the license plate off when you donate a car to charity (if allowed in your state), to make sure you don’t accidentally become liable for someone else’s illegal driving.

Sometimes, rather than donate a car to charity, you may want to consider recycling options.  Some companies may offer a service in which you are not offered any tax or social benefit, but instead can trade your vehicle for hotel vouchers or vacation packages.  If the requirement that your donated car goes to charity isn’t high on your list, this might prove a more agreeable option to you.

It is also necessary to remember that a tax deduction not only requires you to file itemized deductions (rather than taking the standard deduction), but, depending upon the value of your car, there may also be further paper work to do.  For instance, though many who donate a car to charity are able to legally claim significant deductions from the process, if there aren’t any other deductions you can claim that year, you may actually end up paying more on your taxes unless careful.

If you are planning on donating your car locally, the online aspect of your attempt to donate a car to charity is just what is required to get the ball rolling.  But you may find yourself calling around as well to find the right charity that can actually use your car.  Keep in mind this may be difficult or impossible if your vehicle is in terrible and non-running condition.

Throughout this process consider all the options that are open legitimately to you.  Then you will have a better idea how to pursue and trust online links when you are looking to donate a car to charity.

This entry was posted on Tuesday, June 23rd, 2009 at 2:09 am and is filed under Vehicle Donation Advice. 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.