It’s super easy to give a car to charity. The National Kidney Foundation of Utah & Idaho has one of the longest running (since 1990) and most popular car donation programs in the country. We’ll tow away your heap, and help you take advantage of the tax benefits of donating a car.
Here’s the basic gist, but you should discuss these issues with your tax preparer before you donate you so understand your tax benefit. Also check out the IRS’s Publication 4303, a donor’s guide to vehicle donation here: https://www.irs.gov/pub/irs-pdf/p4303.pdf
Here is some additional information on how the tax benefits of donating a car, and what you will need to do to take advantage of these benefits.
To Get the Tax Benefits of Donating a Car, You Must Itemize Your Return
If you want to claim a car donation to reduce your federal income taxes, you must itemize your deductions above the standard deduction.
But even if you don’t, don’t let that stop you from donating. Charitable donations bridge the gap between what the government provides for medical financial emergency aid and what a charity operation can provide kidney patients burdened with out of pocket costs such as insurance deductibles, housing and transportation.
The Tax Bill and Car Donations
Taxpayers who are considering donating a car to charity might be wondering how the tax bill passed into law in December 2017 could affect their decision. To begin with, the bill titled The Tax Cuts and Jobs Act lowered tax rates but also altered the previous income brackets. As of 2018 you may find yourself in a new bracket, which might result in either lower or higher taxes, depending on your individual situation. That means the tax benefit from a donation might be more or less advantageous.
The newest standard deductions were raised from $6,350 to $12,000 for individuals, Married couples filing separately; from $9,350 to $18,000 for the head of a household; and from $12,700 to $24,000 for married couples filing jointly. This change likely means that fewer people will be incentivised give to charity. Which is a true shame for kidney patients.
“The vast majority of taxpayers are going to take the standard deduction,” says David L. Thompson, vice president of public policy for the National Council of Nonprofits. “That means most taxpayers have no incentive to give to charity. That’s a serious concern. We fully expect the doubling of the standard deduction to reduce giving by $13 [billion] to $20 billion a year.”
With these and other changes to the tax laws, it’s more important than ever to give to charity. Consult a tax preparer to understand the benefit to you before making a decision about donating a car to charity. If the most important aspect of your charitable giving is what you are going to get out of it, without deference to the kidney patients whose lives rely on the services provided by your car donation then charitable giving may not be right for you. If you do need to get rid of a car fast and for free, if the cost of the car’s repairs cost more than the car is worth, and you feel great about helping Utah and Idaho kidney patients, then charity car donation is a great option!
The Charity Must Qualify
The National Kidney Foundation of Utah and Idaho is a qualified 501 (c)(3) charity. In order to claim your tax deduction, you should only donate to charities who qualify, like us. A qualified charity is one that the IRS recognizes as a 501(c)(3) organization.
To help you determine whether a charity is qualified, the easiest thing to do is call the IRS toll-free number: 877-829-5500.
Getting Fair Market Value Is Actually Pretty Rare
It’s not realistic to expect that your car will meet one of the stringent fair market value requirements. Only cars in driving condition that can be given to kidney patients, or used by the charity for their programs can be claimed using a Fair Market Value. About two-thirds of the cars donated are sold at auction, and a third are recycled for parts. So unless your car is in good driving condition, it will most likely be sold at auction or to an auto salvage yard. At that point your deduction would be based, not on your estimate of its fair market value, but its actual selling price. However, the National Kidney Foundation of Utah and Idaho has over 30 years of past and current sales data, and can provide you with a realistic estimate of what they can actually sell the car. This can help you make an informed decision about the worth of your donation as it relates to your tax return. However, keep in mind there are no guarantees, only estimates. Gauging the car’s selling price depends of the fluctuation of metal recycling prices as well as the occasional classic car investor.
The Tax Receipt and a Copy of the Title is Key
Documentation is key. It’s important that you’ve signed your title over correctly to the National Kidney Foundation of Utah. Whether they recycle, or auction off your car. IRS Publication 4303 has more details. So be sure to keep copies of your title and the tax receipt (preferably in an electronic file). You’ll need them at tax time.
If there’s a delay in getting the car sold between the end of one tax year and the beginning of another (and you know your car will sell for more than $499), you can ask the IRS for a six-month extension; or later amend your IRS 1040 from the previous year. Another option is to file on time, claiming only the minimum “up to -but not more-than $499″as stipulated by the IRS rules. Lastly, there is no obligation for donors claim the deduction for a car donation. The charity and kidney patients have still benefited from your generosity, regardless of your tax filing.
You Can Always Sell Your Car and Donate the Cash
Besides giving your car directly to a charity, there is another way your vehicle can help a charity and maximize your tax benefits: You can sell the car yourself and donate the proceeds. If you know your car’s history, and are a great salesman, you might be able to generate more cash than if you let the charity sell it.
Getting rid of a junker helps the National Kidney Foundation of Utah provide hundreds of thousands of dollars a year to carry out its mission; providing health and human services to Utah and Idaho kidney patients with out of pocket medical expenses (not covered by insurance companies or government programs). Giving a car to charity will also make room in your garage for a new car :). So it’s important to keep in mind, if your focus is getting rid of a junker with minimal effort and you’d like a tax deduction as a nice bonus, then donating your car is worth it!
Get the Tax Benefits of Donating a Car with Kidney Kars
Getting a tax deduction for donating a car isn’t the only good reason to donate. Most folks actually just want to help others in need. But, also getting a tax deduction is still a bonus. It’s easy, and you don’t have to be rich to qualify. Donating a car is tax deductible for normal range income individuals.
When you donate to a qualified 501(C)(3)charity like Kidney Kars, you can itemize that donation on your IRS 1040 tax return. The generalized tax receipt will allow you to claim an itemized deduction for up to $499 –BUT if your car donation is sold for more than $500, you get to write off the car’s actual selling price!
In 2019, the standard deduction was doubled to $12,200 for an individual and $24,400 for a married couple. While that means that some people might not itemize their taxes, anyone who owns a house valued around $339K will likely pay more in interest than the standard deduction allows – which means itemizing your taxes and donating a car could save you some tax money. Claiming additional deductions on your return makes sense for most homeowners. Additionally if you donate money to a church (which a lot of people in Utah and Idaho do), those cash contributions make it even more likely that your accountant would recommend itemizing your taxes for every deduction possible, including car donations.
Therefore, if you own a modestly priced home, and give cash to a church or charity, it’s likely you’ll want to add as many deductions as you can to reduce your taxable income. Kidney Kars car donations and other charitable contributions, are a great way to lower your taxable income. But be smart, and check with your accountant to know exactly how donating your car will affect your taxes before you donate.
Other Benefits of Donating a Car with Kidney Kars
However, even if you don’t itemize your taxes, there’s a lot of great reasons for donating your car to a charity like Kidney Kars:
- You get rid of a car that’s been laying around
- We tow it away in 48 hours or less, so it’s no hassle for you.
- You feel good knowing you really helped people in need, and maybe even save a life.
So don’t think twice about donating your old car to an accredited, highly ranked charity like the National Kidney Foundation of Utah and Idaho. Not to brag about how Kidney Kars is local, but we’re going to. Many charities who advertise online, take car donations for charities located out of state. The funds raised may not even benefit your own community. Worse yet, sometimes those bigger charities pay 3rd party businesses to both advertise and manage their car donation. That means less money actually makes it to the charity and the people that really need it. But when you donate a car to Kidney Kars of the National Kidney Foundation of Utah and Idaho, you can be assured that your donation will benefit local kidney patients.
You can always call the Utah State Division of Consumer Protection to ask about the charity you intend to donate to.
So when you have an old car, need it picked up in 48 hours or less, PLUS would like a tax deduction — donate to Kidney Kars at www.towKars.org!
You can find us on line at www.towKars.org or you can call us 9-5/M-F at 1-800-TOW-KARS (869-5277)