Car Donation for Charity

Most people assume that car donation and charity giving are tools the rich alone are able to use to ease their tax burden.  This couldn’t be further from the truth!  Anyone can file a tax return with itemized deductions if they bother taking the time and effort to do so.  Though you are responsible for gathering receipts that back up your deduction claims, car donation for charity is now set up in such a way as to make claiming the correct amount in deduction easier than ever.

In the case of car donation, charity organizations have been reliant upon donated items for a long time, though hardly as a large part of their overall donation dollars.  In fact, a report issued by the General Accounting Office (GAO) in 2003, when levels of charitable giving was at its highest in terms of car donation, charity coffers were still little affected by the input of donated vehicles.  As little as six percent of the “typical” charity was represented by car donation.

The self-employed are in an especially good position to take itemized deductions of monies turned back into the business as well as legitimate car donations.  A charity that is sanctioned by the IRS and has a legitimate non-profit tax ID number should be more than able to provide you with the forms you need to make your deduction with the same confidence as any other type of deduction you save a receipt for.

Of course, individual returns are far more likely to claim the standardized deduction, making car donation to charity impossible to claim.  However, filing itemized deductions can actually benefit most taxpayers providing they take the extra time to write them all down.  Indeed, it is common for someone who had previously taken a standardized deduction to find their tax burden to be somewhat to significantly decreased as a result of this extra effort – as much as 30 or 40% in some cases.

With the extra money available for donation that can come from car donation, charity giving can be very useful for bringing one’s income down below the level where they might put you into a higher tax bracket.  Near the end of the year there is often an increase in auto donation by those who are nearing a higher bracket they wish to avoid.  This can save you quite a bit when done correctly.

Generally it is a good idea to not count on your car netting the sort of value at sale that you might imagine it would, given the Kelly Blue Book value listed.  According to current IRS guidelines, car donation to charity that nets over $250 must be accompanied by a receipt that clearly outlines how much value the car actually was able to get (usually when sold on the wholesale or scrap markets) for the charitable organization in question.

Another potentially lucrative use of car donation to charity is using the donation amount as a deduction compared with the expense of fixing up the car yourself for sale later.  Though this can actually save some people more money, one is liable for the capital gains of a vehicle that has appreciated since you took ownership at least one year previously.  In the case of collectible cars that have already been fixed up, this can represent a real hit.  Knowing what cars to donate and which ones to keep a hold of for investment purposes is highly volatile and subject to the other income specifics of such a donor.

It is always a good idea to talk to a CPA, especially if you already have the services of one retained for your regular tax preparation advice.  If you own a business, this is especially true.  Even the same car donation to charity can vary greatly in its value to an individual’s return.

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Technorati Tags: car donation charity

Tags: car donation charity

Though the average person who was liable to donate a car to charitable organizations once included just about everyone in the late 1990s and early ‘aughts, changes in IRS regulations and rules governing deductibles since 2005 has made for a subtle demographic shift towards the upper-middle class with regards to just who will donate a car to a charitable or non-profit organization (NPO).

This is true for several different reasons.  For starters, those who are self-employed are far more likely to take itemized deductions since such workers have far more upward mobility than a given employee. They also tend to make a lot more from such ventures.  Self employment also means that you pay your own contributions as well as those normally picked up by an employer.  This double taxation leaves many of the self-employed on a constant lookout for deduction possibilities.  When you donate a car to charity you can make up several thousand dollars at a time in deductions – sometimes enough to  bump you into a lower bracket.

Of course, not everyone who wants to donate a car is interested in the deduction.  There will always be people who just want their old junker cars to go away and many of the ads imploring you to donate a car rely upon the offer of free towing (and sometimes a hotel or cruise voucher) to help get low-value cars from far less off individuals than the PhDs who are donating perfectly good cars.

However, in yet another installment of how it pays to have a few extra coins to rub together, those who are able to afford to give a working car find that it is likely to be used for transport rather than sold at wholesale auction.  This other type of use occurs when you carefully choose a charity you trust, donate a car to it and find out 3 years later that it’s been used for various official functions and as transport for in-house needs that furthers the mission of the charity.

As such, those who already have some extra money to throw around are more likely to get the higher deductible that they’re more likely to be able to capitalize upon in the first place.  That means the demographics of someone looking to donate a car have somewhat suddenly moved back to where they were before the advertising push of the 1990s.  Though many middle class people might donate a car that doesn’t run very well, they won’t enjoy the higher level of benefits that a better quality donation typically garners.

But other than wealth, the other demographics of those who participate in charitable organizations when they donate a car include many of those who grew up using, or recently used, the services of such an organization.  This gives one a good idea as to how non-monetary benefits work in the real world.  The chance to give back to an organization that has helped one get back on their own two feet is an invaluable feeling of pride and accomplishment that the IRS cannot put a value upon.

So, despite recent setbacks in deduction amount for the typical donation from a mid-level income individual or family, this hasn’t stopped a segment of the population from donating scrap cars that they simply want hauled away as junk.  This is especially true in the case of vehicles that have no chance to have a useful resale value whether conducting the transaction yourself or letting a car donation service take care of it.

The main difference between the classes of donation that have sprung up since the 2005 ruling means that if you choose to donate a car, it may not be very lucrative for the charity in question unless it’s running well and worth their while to fix up for use (rather than selling on the wholesale market), even if they don’t use a third-party donation agent.

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Technorati Tags: Car Donation, donate a car

Tags: Car Donation, donate a car

There are many reasons why needy families in your community can benefit from charitable donations of your old automobile.  Much of this is rooted in the free market economy that dominates in the United States, sometimes despite the best interests of low-income workers that make up the bottom of the labor pyramid that drives consumer spending and business revenues.  Add a hot real estate market that has led a renewed flight of entry level jobs from densely populated urban centers that are well-served by public transit, and you have a crisis situation for many such workers that can only be solved by charitable donations.

It’s not just people on welfare that are in desperate need of charitable donations in the form of food aid and autos.  There are millions of gainfully employed persons in the US who are unable to meet even their  most basic needs.

Recent moves by the Bush administration to reclassify poverty are not fooling anyone who is living that nightmare.  Despite cheery headlines to the contrary, the poor are getting poorer and there are fewer people interested in their plight than ever before.  Perhaps it’s because so many who consider themselves “middle-class” are beginning to struggle as only the poor had once.

Perhaps it’s due to vitriolic rhetoric coming from neo-conservative mouthpieces and politicians who decry any use of public funding to support people not entirely like themselves.  Perhaps it’s just easier to assume that anyone can make it in America.  Well, anyone can, but the cards are definitely stacked against those with low incomes.  Anyone who has ever investigated taking out a payday loan to buy groceries or relies upon credit cards to make ends meet can attest to that.

Regardless of the reasons why charitable donations of automobiles are in such high demand, they are desperately needed by an ever-increasing segment of the working populace.  This problem is exasperated by the premium paid to workers who are able to navigate outside the areas of public transportaion.  Having a vehicle not only means that workers are able to free themselves from the whims of late trains and missed bus transfers, but also the ability to take higher paying work and finally crawl out of the hole and become more fully contributing members  of society who are not dependent upon charitable donations of anything.

That said, it is imperative that one find an organization that is capable of taking charitable donations of automobiles and giving them directly to needy individuals and families that need them.  Not only does this give you the satisfaction of knowing your charitable donations remain in the community, but you also can rest assured that you’ll be able to take the full, fair-market value of your charitable donations that can represent a significant increase over the wholesale auction price that is often given.

Even if the car is eventually sold at a deep discount to the organization’s constituents, you may still claim the full value, as long as it’s not sold to a member of the general public.  If repairs are made to one of your vehicular charitable donations before use, you’re still able to take that fair market donation according to the condition in which the car finally appeared.

Indeed, organizations that provide automotive transport have classically been those that chiefly benefited from these types of charitable donations.  Whether they exist to transport a needy individual to doctors appointments, a school of higher learning or even just keeping someone in touch with their linguistic community once they’ve had to move away to take work elsewhere.

Charitable donations of automobiles also have the advantage of giving a segment of the population a sense of freedom that their low-wage jobs don’t often afford.  It’s this sense of individuality that has made the US the crucible of self-determination that is envied the world over.  Even if you didn’t stand a very good chance of increasing your personal tax exemption with charitable donations of cars and trucks, creating a future population base that is fully contributing to the national economy is useful to everyone.

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Technorati Tags: charitable donations, Local Car Donations

Tags: charitable donations, Local Car Donations