Car Donation Tax Deduction GIVES DONORS Incentives and Similar BENEFITS
The majority of charitable donors do not have their own interests in mind when preparing a donation. Yet donations can provide rewards for donors, particularly if the donation is as large as an automobile. A car donation tax deduction can provide significant financial benefit for the donor.
Car Donation Tax Deduction: Just One Reason to Give
There are a number of benefits and advantages to be reaped from donating a vehicle. For personal benefit, the car donation tax deduction is one of the biggest. When donating a vehicle to Vehicles for Change, donors can receive a tax advantage that’s rarely possible with other charities and nonprofit organizations.
Instead of receiving a tax refund for a portion of your vehicle, Vehicles for Change’s mission allows you the chance to claim your car’s full market value – the maximum amount permitted by IRS regulation and law. In addition to getting the full market value, the Vehicles for Change team will carefully dissect each donation to ensure the end user gets the most value out of it – which only maximizes your donation value.
Car Donation Tax Deduction Falls Into One of Four Categories
When you donate a car through Vehicles for Change, your donation will fall into one of four distinct categories.
The first category refers to vehicles that can be reconditioned and repaired for less than $1,000 and are expected to provide another two years or 24,000 miles of reliable service. These vehicles are usually 10-12 years old and have between 100,000 and 150,000 miles. Vehicles for Change usually repairs and details these cars before awarding them to prequalified low-income families. This is the ideal situation for donors, as the fair market value can be deducted for tax purposes.
The second category refers to cars that need major repairs, but are otherwise in good condition. An example of a major repair would be a new transmission. In these situations, Vehicles for Change performs the repairs and sells it through its Freedom Wheels program – a used-car business open to the general public. Proceeds are then used to repair and recondition vehicles for low-income families. For cars falling in this category, donors can deduct the car’s fair market value, minus the cost of the major repair.
The third category refers to luxury cars that are in good condition. Vehicles for Change does not award luxury vehicles to low-income families because they often require expensive ongoing maintenance. Instead, these donations are sold through Freedom Wheels. Donors can usually deduct the selling price of the vehicle – which is typically equal to or near the fair market value.
The final category includes cars that don’t meet the Vehicles for Change reliability standards and would not be cost-effective to repair and recondition. These cars are usually auctioned off using one of Vehicles for Change’s auction partners. Donors can then deduct the selling price of the vehicle. In most cases, these vehicles sell for 1/3 to 1/2 of their fair market value.
Why Donate a Vehicle to a Low-Income Family
The question may seem simple, but it’s one Vehicles for Change gets on a regular basis. How are donated cars actually used to benefit families in need? While donors are not permitted to contact the families who benefit from their gift, the individuals most affected include household providers, children, and caregivers.
Whether it’s one or two people, each household usually has a primary breadwinner. This individual is tasked with bringing home money to support the family and pay for monthly expenses. For a household without a vehicle, it’s exponentially more difficult to make a steady income. Without reliable transportation, holding a job (much less getting one) is challenging. With a vehicle, providers can arrive on time, prove responsibility, and even pursue career growth and improvement.
As for children, the convenience of transportation enhances their personal and social development in unimaginable ways. For example, with a vehicle, parents can take children to extracurricular activities that help them develop skills. This could be organized athletics, camps, music and art classes, or social events. Without a car, parents are forced to rely on other modes of transportation, causing most children to stay isolated at home.
The third major group that is affected by car donations is caregivers and dependents. Whether it’s a child with a special need or elderly parent with a disability, caregivers need vehicles to take dependents to appointments and treatments. A donated car provides the freedom to care for loved ones more effectively.
How Donated Vehicles are Awarded to Applicants
Donated vehicles are awarded to applicants through the VFC program. The program awards vehicles to low-income families that are connected to a partnered social service or job readiness agency. Applications must be submitted through the agency, and recipients are guaranteed low-interest loans. These cars usually cost around $750.
To apply, applicants must fall under maximum income levels and other requirements. These include having a verifiable job offer or existing job, being insurable with a valid state driver’s license, having no criminal history, and being able to afford ongoing maintenance and initial fees. If the applicant is under 25, he or she must have children to qualify.
The Many Benefits of Donating a Car
While a car donation tax deduction is certainly a viable reason for donating a car to Vehicles for Change, remember that every gift directly impacts a low-income family in need. Regardless of your motivation for giving, your gift plays a major part in improving the state of your community and the financial future for those who need assistance in their journey for stability. For additional information on what a car donation tax deduction looks like or how to go about the process, Vehicles for Change can be reached online or by calling 855-820-7990.