Abby's Guide to Donating Cars
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Car Donation

Your old clunker has just about had it and you have just leased a brand spanking new car for your family. What to do with the "has been"? At your mother's birthday party, Uncle Jack takes you aside and says the two magic words - donate it! Before you jump at the chance to get a huge charitable donation on the little lemon, take a deep breath and do your homework.

Donating a car or boat to charity sounds extremely simple. You will avoid the hassle of selling your vehicle and all the associated paperwork, plus you'll be getting a tax deduction and helping out the needy. It sounds like a great idea, but the reality can be a lot more complicated. You might be surprised at how tricky it can be to donate a car and do it right. Before you hand over your big investment, make sure you're working with an organization that's on the up and up and that you're doing everything the right way.

Avoid the Middlemen

There are lots of ads online and on television for groups that will help you donate your car. However, these organizations are-for-profit. That means they keep anywhere from half to ninety percent of the value of your vehicle and don't give much to the charity itself. That could do a lot to ruin your well meaning gesture. Avoid this by working directly with the charity you'd like to donate to, instead of a middleman, who might end up with the majority of the money from your vehicle.

If you do decide to go with a middleman, be sure to do the math. Middlemen can take a lot of the weight off your shoulders, and some busy people choose them. Make sure you find out how much of the vehicle's value is going to go to the charity. Some middlemen offer only a flat fee, giving $100 to the charity, regardless of how much the car sells for. That's a bad deal and a bad way to get rid of your car. It could also ruin your chances of getting a tax deduction for your donation. Do it yourself if you can and check up on the middleman if you have to use one.

Use a Worthwhile Charity

Not every charity is set up to handle car donations, and not every charity that accepts them is a good one. You'll have to do your homework to find a charity that's both capable of taking your donated car, and reputable enough to do some good with it. The Better Business Bureau can help you keep track of a charity's record of honesty. Be willing to check up on any organization, no matter how good it looks on the surface. A surprising number of charities don't work as well as they should.

Check the status of any charity you're planning to donate to, especially if you're certain you want the tax deduction. The charity you donate to needs to be approved by the IRS as a 501(c)(3) organization. A lot of local organizations should qualify, including temples, mosques, synagogues and churches. That means that religious people may wish to simply donate to their local place of worship. To find out if a non profit organization qualifies, just go to the IRS website. Publication 78 will help you find organizations that you can donate to and still get a deduction.

Deliver It Yourself

Once you have found the charity, don't have them handle the car. The charity will have to pay someone to do the pickup and drop off and that takes money out of their pocket. If you want your charity to get the most out of the donation, arrive with the vehicle yourself. Remember to do the transfer itself carefully, since you could have legal trouble if you don't. Make sure you formally retitle the vehicle in the name of your charity and report the transfer to the DMV or similar department in your state. Never leave the ownership area on the donation papers blank - you could get someone else's parking and driving tickets, or run into other problems.

Take Care on Your Taxes

The IRS probably won't be willing to accept your estimate of the value of your vehicle. Cars that are worth more than five hundred dollars should be documented. Get a receipt from the charity for the value of the vehicle, so you can provide the IRS with this information in writing. Keep track of the paper trail, and remember that for a vehicle worth more than five thousand dollars, you'll also need an outside appraisal in your paperwork. Have a copy of the title change on hand, and go over every piece of paperwork carefully to make certain that you get the biggest deduction you can. Being detail oriented will help you and the charity get the most out of the donation.

Donating your car might not be as simple as it seems at first, but it is still a worthwhile thing to do. Take the time to check up on any organization you'll be working with, try to keep the details in mind and make sure you track all the paperwork. The extra effort will be worth it in the end. Donating your car is a great way to help out a charity and receive a useful tax deduction, but you've got to do it right. Talk to your financial advisor and accountant to find out if donation is a good idea for you. It could be an excellent opportunity.

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