Pros and Cons of Donating Your Car to Charity
If you are thinking about donating your car to charity then it is important to be fully aware of both the advantages and disadvantages of giving away your car. You may reaffirm your decision with all of the positive aspects of donating your vehicle, or could discover that the drawbacks are not worth the good deed. Here are some advantages and disadvantages to donating your car to charity.
Advantage: Doing a Good Deed
One of the more obvious advantages of donating your car to charity is that you will be doing a very good deed without putting a dent in your wallet. Who doesn’t like a bit of good Karma? If you weren’t going to get much for the car anyway then donating a vehicle to charity is a very noble act that you can feel proud about for a very long time. In fact, at some charities that you donate to, instead of selling your car for money to be put to a cause, it will be given directly to someone who is in great need of a vehicle, whether it is to get to and back from work or to take their children to school. You can feel great in knowing you changed a life.
Disadvantage: You Will Lose Out on Some Amount of Money
In most cases you would have been able to gain some amount of money from selling your car, no matter how small the amount. By donating your vehicle you are giving up that amount of money, which could have been put toward a new ride.
Advantage: It is Extremely Easy to Do
All you need to do in order to donate your vehicle is to call the charity of your choosing that takes cars as a form of donation, and they will tow it away. This is a very simple way of getting rid of your car, especially if you don’t want to deal with the hassle of selling it. There is practically no work involved, which makes it ideal if you are extremely busy.
Advantage: Deduct the Donation From Your Taxes
If you want to maximize the benefit of donating your car for both yourself and the charity then you’re going to want to deduct it from your taxes. This will give you a substantial tax break that can be very attractive during tax season.
Disadvantage: You Can’t Just Donate to Any Charity
If you want a tax break on donating your car then you won’t be able to donate it to just any charity. The charity of your choosing must qualify under the IRS. This means that you can’t just donate your car to a councilman’s organization or hobby club and expect a tax break. You must ensure that the charity has an exempt-status with the IRS. Keep in mind that if you want to donate your vehicle to a religious organization, you will be able to gain a tax break even though they do not technically qualify for an exempt status.
Disadvantage: Deducting It From Your Taxes is Complicated
It used to be easy for those wanting to deduct the fair market price of a car they donated to a charity on their taxes. However, in 2005 the IRS changed the rules on how you can deduct a donated car. In this day and age, you are only allowed to deduct your car’s fair market value with extremely specific conditions. It is recommended that you go over this with your tax preparer before taking action. Also keep in mind that if your locality or state levies income taxes, you will likely be subject to additional rules.