With car donation, US citizens can get a tax benefit

In the US, car donation is a practice that a number of men follow to give away automobiles that are no longer required to charitable organizations. Not only cars, used trucks, boats or RV are also donated to the favorite charity of the owner of these vehicles. These persons receive a tax deduction equivalent to the market value of the vehicle when they donate a car. This has become very popular with citizens who want to avail this opportunity and can kill two birds with one stone….one, they get a tax deduction and two, they are able to get a new car whenever they want to upgrade their vehicle or just buy something new. However, donors need to fill certain requirements after car donation for the car to qualify as a tax benefit.

 

Vehicles that are valued as less than $500, the deduction amount for tax comes from the donor’s own estimate of the car value. If the car is valued at more than $500, the amount for tax deduction is arrived at after auctioning it. In UK, car donation schemed are a bit different from those in the US and have just been established a couple of years ago. The process was begun by a non-profit organization called Giveacar, which allows charities to avoid large overheads that are created by profit making through a car donation scheme. But, no tax breaks are awarded to the person donating a car to charity….at best; he deserves and attains the good will of the charitable institution. In fact, many charities run donation programs and some actually have their own donated car lots which they sell or get processed through auctions. These companies take a percentage of the sale proceeds and since they do not have any dedicated staff looking after donated cars, a part of the sale is permitted and the companies can benefit from car donations. In the most ideal case, it would be good if the donor finds out how much of the car proceeds is taken by the auction companies.

There are also other car donation professional service companies that use a variety of methods to sell the vehicle e.g. wholesale, consignment, retail, public and even dealer action. The internet is also used and eBay along with another website Craiglist is also used to sell the car. With these service companies, the average selling price will be slightly higher than with those who simply send your car for auction. This actually means that there will be more money for your favorite charity and a larger tax deduction for the owner of the vehicle. And the car need not even be in running condition. Only filling up of an online donation form is required and they will pick up the donate car at no extra cost. This type of car donation has become quite widespread and some critics are frowning on it because it has become a tax shelter.