Donate a vehicle with tax deduction?

Question

I would like to know how to donate a vehicle, and how to calculate the tax deduction (federal tax ? state tax). Who I should contact with?

I have an used car current market price is about $5000, and would like to sale or donate, but this car requires $1500 to repair if I want to sale it. I would like to know if make vehicle donation (sorry, I won't fix the car) will be better for me.

Please don't give me any answer like "Giving it to someone in need of a car will be a lot more charitible ..." or "make you feel pretty good to help others ...", I am not in the level to give away few thousands, so please give me advice if you know anything about vehicle donation.
Thanks

Answer 1

If you donate the car to a 501(c)3 charity, you will get a notice from the charity telling you what they sold it for (they usually sell the donated vehicles). That amount will be your deduction if you itemize on your income taxes, , and you won't know what it is until AFTER you've made the donation and they've sold the car. Say for example that they wholesale it for $2500 - they won't mess with fixing it either, and won't be able to get bluebook price for a car in need of major repairs. Wholesaling it, they'd probably be lucky to get $2500. Then your tax savings for federal taxes would be $2500 times your tax bracket. If you are in the 15% bracket that would be $375 - in a 25% bracket that would be $625 in tax savings.

MattD is wrong that you can take a deduction of the fair market value of the vehicle - that rule has changed. And since it needs the repairs, the fmv would be more like $3500 anyway, not $5000.

If you don't already itemize, it's likely that you wouldn't get any deduction at all unless you are already very close to being able to itemize.

If you gave it to someone who needs a car, no matter how worthy that person was, there would be no tax deduction - donations to individuals aren't deductible.

In most states, there would be no state tax savings since donations aren't deductible most places.

Answer 2

Contact a company like Purple Heart and let them know you have a car you wish to donate to them. They'll give you a receipt for the vehicle, which will include the price they are able to get for it. This is the amount you will claim as a deduction. Be advised though, the car donation is a red flag to the IRS, so expect to be audited. They are looking to be sure you're properly claiming the deduction, and not just making up some number to cut down on your taxes.

Answer 3

If you are looking for the most financially viable method of disposing of the car, you should either sell it 'as is', or get it repaired and then sell it for full value.

Donating the car only gives you a charitable contribution deduction of the fair market value of the car at the time of donation. Since the highest tax bracket for federal purposes is about 35%, the best you will gain from a charitable contribution from the federal government is 35% of the market value of the car. The same concept applies to your state income tax, which is most assuredly at a level closer to 10-12%.

Answer 4

Fix it up, sell it for retail, and donate the cash. You'll get the largest possible deduction that way. As Judy correctly pointed out the charity will wholesale it off for whatever they can get and that will be all you can deduct.

Answer 5

Your saving will be the value of your donation times your tax bracket percentage.
So if you are single and are in a 25% bracket and the value is $5,000, your tax savings would be about $1,250. If the car is worth less than that, then adjust the savings accordingly.

Also, I assumed at 25% bracket - adjust that for your true bracket.

And depending upon other income details, you may not be able to deduct the whole $5000 in one tax year; it may have to spread over several years.

Answer 6

the value of the vehicle is irrelevant. when you donate the vehicle, the charity will sell it...the price sold is what you may deduct. gone are the days when one can arbitrarily inflate the value of an auto and deduct it...no more..no how

Answer 7

Non-profit charity: http://www.withcauses.org/. They accept all kinds of donations from boats, cars, computers, furniture, collections, etc. They come pick up your donation for you free of charge. They never hassle you for more donations later either....give at your discretion, no pressure or hassles. They respect your privacy and value your contribution.