If you are considering making an auto donation, whether a car, truck or RV, you need to be aware that the donation may not actually be in your best financial interest.  Of course, charitable giving is it’s own reward for many, but if you consult your accountant, you may find that the tax deduction offered as a result of your auto donation is not of much benefit to you, especially if your auto donation is worth more than $5,000.  You need to consider your actual benefit in order to determine whether or not it makes financial sense to donate your vehicle.

To begin with, when you file your return, you’ll need to file with itemized deductions, rather than taking the standard deduction.  This can work against you if you’ve not placed much of your money back into living and working expenses.  Generally, 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.  A young person just entering the workforce as a low wage employee may find it difficult to account for enough expenses when calculating their taxes.

Also, you should 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 deduction, often they are not interested in fussing with their returns.  The price of some tax preparers is low enough that a large percentage of those in the US use them each year, with widely varying results.

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 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.  Find out if any auto donation service is registered to practice in your state.  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 upon an auto donation service.  Such 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’re chosen.  Often, one will contact the charity themselves with a cash donation after doing some research into the non-profit organization they’re interested in supporting.

In short, one should consider their motivations for any auto donation and balance that with their time constraints and personal financial gain in the form of a large charitable deduction on their taxes.  Remember that deductions are taken off your taxable income, not the tax due.  The relative worth of such a donation does depend upon your tax bracket.

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.

When one has a vehicle that is a candidate for a car donation, we are often much too busy for doing a great deal of shopping around for the most needy individuals in the community, much less, repairing and making that vehicle a useful donation. A legitimate car donation center will be able to take care of your automobile, find it’s best and most charitable use and provide you with a tax receipt.

But, how do you know your automobile is being used for the charitable purposes the supposedly authorized car donation center claims to support? There are several signs, especially when you’re looking online for such a service or responding to solicitation, that you’re dealing with a non-authorized vehicle donation center.

A quick check with even a few charitable organizations should yield an acknowledgment of the authorized vehicle donation center’s association as an agent of that charity. Any legitimately authorized car donation center will be able to provide you with a list of charities it brokers deals for.

Though very few authorized vehicle donation centers are registered with the IRS as a 501 (c)(3) non-profit organization, the charity you donate to must be. Without this badge of approval from the tax authorities, you’ll not be allowed to legally take the deduction. Even worse, this can set you up for an audit and no one wants to mess with that kind of attention. A truly authorized vehicle donation center will be able to provide you with their tax ID number so you may check it on the IRS website.

Several states additionally certify authorized vehicle donation centers on their own. If your state is one of these, you can easily check with the state attorney general’s office to see if the donation center you’re considering is listed on the state non-profit rolls. If not, you may not be dealing with an authorized vehicle donation center at all.

The authorized vehicle donation center is most often, in fact, over 95% of the time, a for-profit venture. The donation center must follow certain rules of conduct with regards to how you may be enticed into vehicle donation. There is also a register of organizations that are not allowed to do business in the state.

One very important function of an authorized vehicle donation centers is helping you determine a fair donation value for your donated car, truck, boat or RV to be reported to the IRS. This is not the so-called “blue book” value but, instead, its value on the market. Bear in mind, this market may be wholesale rather than retail.

Most often, the value you’ll be given a receipt for is the value the charity ultimately receives for the car. If you don’t receive a receipt suitable for tax purposes right away, that’s o.k., but if you’ve not heard anything in a few months, you should start making phone calls to the authorized vehicle donation center’s offices. If the car is being repaired before sale, it could take awhile, though even authorized vehicle donation centers very rarely do that, preferring the wholesale and scrap methods.

This is especially true in the case of vehicles that are not currently running. However, there is still money to be made, and most legitimate and authorized vehicle donation centers will be happy to come and haul your old car, truck or boat away for free. You should be suspicious of any supposedly authorized vehicle donation center that would require you to pay for towing services and ask.

If the fair value of your car is less than $250, there is no reason to bother with a form of donation from your chosen charity or a third-party organization such as an authorized vehicle donation center. However, over that amount, you’ll need a receipt in writing. If more than $5,000 is received for your vehicle, you will require an additional form (Form 8283, section B) to be signed by a representative of the authorized vehicle donation center in question and an independent appraisal.

Though there are certainly hucksters out there who would take advantage of charitable giving to line their own pockets, the IRS and state governments have laws to protect you. The state Attorney General’s office will have a list of known scammers to avoid. Once you know the authorized car donation center you’ve chosen is legitimate, then you can donate with confidence.