The Lowdown On Automobile Donations
Read this before making any automobile donations.
Automobile donations seem to be a great idea. After all, you’re getting rid of a car that probably doesn’t run well anymore and a well-deserving charity is getting some much needed cash. And on top of all that, you get a tax deduction to sweeten the deal. Sounds great, doesn’t it?
While it’s true that automobile donations can indeed be a noble deed, you want to check into a few things before donating your automobile to any organization.
Check Your Car’s Fair Market Value
Before giving any automobile donations, check your car’s fair market value. That is the amount that you’ll be able to deduct from your taxes. That doesn’t mean the blue book value. The fair market value is what the car would sell for were you to sell it to a private party. This will give you a starting point so you know what the value of what you’re donating is.
Are They A Charity?
Once you know the value of your car, check out charities that you’re going to consider donating to. There are tons of groups and individuals who will be willing to take your automobile donations, but are they in fact a charity? Before donating your car to any person, group or organization, make sure that they have 501 (c) 3 status from the IRS. Only automobile donations to 501 (c) 3 organizations are tax deductible.
How Much Does The Charity Really Get?
Most charities who accept automobile donations use a broker to do so. You donate the car, the charity uses the broker to sell it, the broker gets a commission. Sounds fair right? But do you realize that some brokers take up to ninety five percent of the profit from your automobile donations? That’s right!
That means the charity is only getting five percent of the profit. That means if your car sells for $1000, your charity is only getting $50 of that and the broker gets $950. Doesn’t seem right does it?
Before making any automobile donations, ask the charity how much of the donation goes directly to them and how much goes to a broker.