Understanding Auto Donations And Its Implications

Car donations can be made by donating a car to a charity that is qualified under the Internal Revenue Service. The charity can be approached directly by the donor or the donor may involve some middlemen.

USA, AL (prHWY.com) September 4, 2012 - (Press Release) 04 Sep-How can I donate my car? This is a question that is being asked by a lot of donors who want to donate a car to charity and also want to have tax shields. Here are some considerations that will help to answer the question. Car donations can be made by donating a car to a charity that is qualified under the Internal Revenue Service. The charity can be approached directly by the donor or the donor may involve some middlemen. There are many middlemen working for car donations that help you approach your desired charity and donate a car to the charity. These middlemen take their commission. You should carefully decide the middlemen with the help of which you approach a charity to donate your car. Frauds may be there, so you should properly inspect the middlemen and the charity and keep in touch with the charity to know whether they have actually received the car donation or not.


When you donate a car to the charity, you receive tax benefits. But not all car donations result in tax credits. According to the internal revenue Service, a car donor in America can receive car donation tax credit by donating a car to the charity. IRS has tightened the rules of Car Donation Act in 2005. According to IRS, if auto donation is worth $250 to $500, then the donor can deduct the fair market value of the vehicle from the gross income and can have car donation tax deduction by submitting a written acknowledgement to IRS taken from the charity. And if the auto donation is more than $500 then there could be two cases. In the first case, if the charity decides to sell the car and use the sale proceeds to finance the charitable activities then the donor can deduct the sale proceeds that the charity gets by selling the car and thus have car donation tax deduction by submitting a written acknowledgment to IRS taken from the charity within 30 days of the car donation.



In the second case, if the charity decides to use the car donated by the donor without selling the car and using the proceeds then the donor can deduct the fair market value of the donated car and have car donation tax deductions by submitted a written acknowledgment to IRS taken from the charity. This can be figured out from the discussion that donors of high value cars are less likely to be benefitted from the car donation tax credits if the charity wants to sell the car to use the proceeds. For example, if a donor donates a car having a fair market value of $2000 to a charity and the charity decides to hold charity car auction and auctions the car at $1500. Then the donor will use $1500 for deduction in taxable income rather than using $2000. This would reduce the car donation tax credits yielded by the car donation. But if the charity decides to keep the car then the donor will deduct $2000 from the taxable income and hence this benefits the tax shields.

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Tag Words: vehicle donation, car donation, auto donation

Categories: Automotive

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