Fair-Market Prices For Your Junk Cars
Donating your car to charity comes with tax benefits, along with a sense of purpose. However, it isn't always easy to get done.
Fair-Market Prices For Your Junk Cars
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Your first step in donating your car will of course be to find a charity to donate it to. The first thing you should look for in a charity is that it is a legitimate, registered 501(c)(3) charity. You can confirm a charity’s 501(c)(3) status using the IRS website.
The portion of proceeds going toward the administrative operations of the charity is also a number to keep in mind. Ideally, the charity will spend 15 percent or less on administrative costs.
Keep in mind that many charities will accept vehicles, but require third-party services to facilitate these donations. You may deal with these services directly when donating your vehicle. These third parties operate by keeping a portion of the donations made, so you’ll want to also be aware of how much they keep of your donation.
The charity should keep 75 percent or more of the proceeds — anything less than 60 percent, and you should look elsewhere. Towing costs should also always be covered by the charity or third party.
Make sure that the name of the charity is on the title when you transfer. The IRS will require documentation of this down the line. When you donate your car, there will be documentation you should receive from the charity that you’ll need when you file your taxes. Since you also need to know the price if your car is sold when claiming your deduction, make sure you keep contact information for the charity.
You also have the option of selling your car yourself, either privately or for scrap and donating the proceeds yourself. Selling junk cars has become faster and easier than ever with the help of online resources which eliminate the need to visit multiple junkyards.
Reputable sites such as JunkCarMasters.com will quickly and safely buy your car, making it easy to donate your proceeds to a charity you believe in.
If the charity you’ve donated your car to sells it, the amount they sold the car for is the amount you can claim as your deduction. Even if that number is below the market value of your car, you must claim the sale price.
The exception to this is for deductions below $500, in which case you can claim up to $500. If your car’s value was $700 and it sells for $375, for example, you’ll still receive a $500 deduction. You’ll need Form 1098-C for your taxes that lists the sale price of the car.
If the charity doesn’t sell your car, you will be able to claim your car’s fair market value as your deduction. Get an estimate from local mechanics and buyers. Keep a copy of this valuation for your records and a copy for your taxes.
The IRS requires proof of the claims you make on your taxes, so it’s important you stay organized through the process of donating your car. Your car donation document checklist should include:
A written form from the charity itemizing your donation with the name of the charity, your contribution (sales price or market value), a detailed description of your donation, a statement verifying you didn’t receive any payment for your donation, your name and taxpayer ID number, the donated car’s VIN, and the date of your donation.
Form 1098-C from your charity of choice if they sold your car.
The fair market valuation of your vehicle, if it wasn’t sold.
If the valuation of your vehicle is over $5,000, you’ll need a written appraisal of its value.
To claim your car, you’ll need Form 1040, which is where you’ll itemize your deductions. Remember that your deductions can’t meet or exceed 50 percent of your gross adjusted income. Additionally, keep in mind that deductions are not a direct savings, but a decrease in your reported taxable income.
You’ll also need to fill out Form 8283, and do so differently based on the value of your vehicle. Section A is for amounts between $501-$5,000, Section B covers amounts exceeding $5,000 and must be accompanied by a written appraisal.
If you want an easier way to dispose of your junk car, look to JunkCarMasters. We can tell you what your car is worth in 90 seconds and make a fair market offer with free towing and free title transfer. With our service, you’ll get paid for your car in under 48 business hours.
Once you get the payment, you can do what you like with the cash, whether that’s pocket it or donate it directly to a charity of your choice! It’s more cost-effective than donating your vehicle, and you get the benefit now rather than next tax season.
Just get an offer, describe your car, schedule your pickup and wait for the driver! We’ll come to you with a check in hand and you can collect your payment on the spot. When you junk your car with JunkCarMasters, the only documentation you require in most cases is your vehicle title.
Get an offer with JunkCarMasters today and get rid of your headache without the fuss.