should i donate my car for a tax wirte off for next year?

Question

i have a 2000 mercury sabe the car still looks showroom condition but it as a lot of miles on it i just picked up a 2007 nissian altima and decided not to trade in mine as it wasnt a lot id get or it but my acctountant said i may want to donate it to use against my taxes is tis a good idea and where should i donate it

Answer 1

You will always make more money by selling it. Therefore, if you donate it, make it to a charity that you would otherwise want to donate to.

For example, if you sell it for a 1000, then you have a 1000 dollars. If you donate it and it is a worth a 1000 and your tax rate is 30% then you will have saved 300 dollars. Compare 1000 to 300. The difference is the donation that you would otherwise have made.

Answer 2

If it is for your conscious --> donate it

If it is about $$$ and sense ---> sell it.

Example: If you donate a $5000 value car to charity and the charity sells it at the auction to raise money, here's how it works:
THe charity sends you a receipt showing its NET cash. So if the auction raised $4200 and it cost $200 in selling expenses, your write-off is $4000.

Assuming you are in the 25% tax bracket and you already itemize, this saves you $1000 in real taxes. If you CANNOT otherwise itemize, say you and your wife rent an apartment, then the $4000 won't even get you into an itemized deduction range, then the contribution WON'T EVEN AFFECT your taxes!

Same good samaritan idea: You want to give to charity. Sell the car for $5000 yourself. Give the charity the $$$. Now you have a 25% x $5000 writeoff, or $1250 tax saved.

OR, you just sell the car. You have $5000 in your pocket!

OR make everyone happy...sell the $5000 car, donate $1500 to charity. You'll end up with $3500 in your pocket, plus $375 tax reduction.



Tax Advisor

Answer 3

It used to be a good idea, since you could donate the Blue Book value of the care. But it may not be such a good idea now.

If you donate your car to a charity and they sell it, they will send you a 1098C showing the proceeds from the sale. You will be allowed to donate only the proceeds, which may be far below the book value of the car.

If the charity uses the car for its own purposes or gives it to a needy person for free or at a discount, then you can deduct the fair market value of the car. You would need proof of this, and possibly an appraisal as well.

Answer 4

It depends. You'll get a deduction for it if you itemize, and you won't if you take the standard deduction.

Organizations usually sell donated vehicles. Assuming they do, they'll send you a form saying what they sold it for. That amount is what you can claim as a charitable deduction. You can't claim blue book, or an appraisal. If the car is high mileage, they probably won't get a lot for it - and remember, your tax savings are the deduction times your tax bracket - if they got $2000 and you're in a 15% bracket, your tax savings would be $300. So if you're donating it just for the writeoff, you'd probably do better just selling it outright.

Answer 5

YES! The salvation army or some other local charity would give you a tax receipt for write off purposes.