How to Donate a Car for Tax Deduction?

If you are in a process of donating a car, then you could see ads every where asking you to donate your old or junk car for charity and get a tax deduction. Now the million dollar question you might get in your mind would be; how to donate a car for tax deduction? Don’t worry because you are not alone, there are a few things you need to know before you make a donation or charity of your used car or vehicle.

IRS in its inception to tax exemptions for car donations have laid down certain rules which are easy to remember and to follow for people attempting to donate their cars, you can directly entrust with a charitable organization who do auctions of used cars, this way you get the maximum benefit with the selling of your car in the auction. Most chances are you get the fair market price for your car in the auction. And it is as simple as that you just need to give them the power of attorney with a signed document to go ahead with the auction of your vehicle.

Another point you need to remember is to itemize your tax deduction, after 2004 the IRS has amended its rule by checking the vast mismanagement by the charities and the middlemen taking the full advantage. Under the new rule if your car fetches more then $500 in the auction you are liable to get the charity organizations promotional tangible selling fee for your car in tax deductions. But that could leave the donor of the car with too less of amount to be called as a tax rebate, sometimes could be 10 – 15% of the actual amount. For that reason most of the charities in order to help higher value used car donors, started to refurbish the cars to make them available for under-privileged and economically backward people. It proves helpful to the donor’s to get the actual returns for the car donation he/she makes.