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It’s the season of giving. Here’s why you may want to give away your vehicle this year.
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I’ve never donated a car before, but I’ve owned a few that looked as if they were donated to me. I once bought an old used car that I thought would last through graduate school, and then I’d get rid of it right after that. Ten years later, I was still driving it around.
At some point, I came to the conclusion that it was time to let it go and had I thought about it more, I would have considered donating to a charity. The car probably would have gotten more use from the charity than the amount I got for it at the dealership.
If you’ve got a vehicle you’re ready to part ways with, here are a few underrated benefits of giving your car to charity.
1. You can get a tax deduction
Donating your vehicle can be a win-win scenario: A charity gets a car, and you get a potential tax deduction. This might be especially beneficial if your car isn’t worth all that much. TurboTax says if you donate a vehicle that’s worth more than $500, but the charity sells it for less than that, you may still be able to claim a deduction of up to $500 when you file your tax return. Note that you must itemize your deductions on your return; if you take the standard deduction, you will not be able to deduct the car donation.
Make sure you don’t overestimate how much the vehicle is worth. For example, if you donate your car to a charity and it sells the car for $1,000, you can only claim how much it was sold for, regardless of how much it might actually be worth on the private market.
And if you’re claiming a vehicle donation deduction of more than $5,000, you’ll need a receipt from the charity proving that it sold for that amount. Be sure you review IRS rules and find the proper forms.
2. It feels good to be generous
While most of us don’t give things away just to get a psychological boost, doing so is an underrated benefit. The American Psychological Association says that research studies have shown that being generous “creates more interaction between the parts of the brain associated with processing social information and feeling pleasure.”
This might be especially true when you donate a vehicle to a cause you really care about, so spend some time thinking about what charity you want to help.
3. It’s a pain to sell the car yourself
Meeting strangers and trying to convince them to buy my car isn’t what I’d consider a fun Saturday. But everyone’s different, maybe you’ll like it.
Listing the car for sale online and trying to coordinate a time to meet up with potential buyers is going to take some time. You’ll likely have a few no-shows, which will waste more of your time, and by the time you find someone really interested in buying your car, you may have to sell it for less than you wanted.
Or, you could drive it to a charity’s offices and toss a staff member the keys. Just make sure to fill out the appropriate paperwork first. Then, you can chuck the keys.
A few things to remember before donating your car
Most charities that accept car donations will have a process in place for switching over the car title. It might be a good idea to call ahead and make sure your charity has the right paperwork to do this before you show up with your vehicle.
Also, it’ll be up to you to cancel your car insurance. Paying for insurance is one of those things that most people set up and then forget about, so make sure that you cancel your policy once you’re no longer driving the car.
And finally, get a receipt from the charity. It’ll make it much easier to list the donation on your tax return accurately.
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