Hello and Welcome to Your Car Donations Blog, I hope you find the answer to your questions here.

It’s hard to read the paper or listen to radio and not hear ads for charitable vehicle donation – regardless of their claims, it take some effort on your part to donate a car for tax deduction purposes and benefit everyone involved.  Of course, that’s exactly what’s supposed to happen, but in practice, agents that handle car donations for charity (and buy those ads) can come out far better than everyone else in such a transaction.

Getting your charity of choice the best deal when you donate a car for tax deduction purposes will also increase the amount you’re able to subtract from your income when figuring your taxes.  It is to your advantage to find a charity that can use your vehicle directly, rather than selling it off.  Even if they donate it to an individual or family in need, you are allowed to deduct the fair market value of your car, as they would have paid if you’d sold it to them directly.

There was a loophole in the 1990’s and early ‘aughts that caused third-party, for-profit agents to skim as much as 70% from each vehicle transaction at auction.  The reliance upon wholesale auction was further complicated by the for-profit reliance of such companies upon economies of scale.  Without volunteer labor, it cost to much to take time finding a retail sale.  Thus, a vast majority of donated cars for tax deductions were sent to the wholesale market.

This practice was noticed by independent reporters and the US General Accounting Office.  This meant that there was a large discrepancy between the amount claimed as “fair market value.”  Nearly $700 million in discrepancies were noted in 2000, for instance.  Since 2005, for those who’ve donate cars, tax deductions have been seriously limited and include additional filing requirements.

The fair market value continues to be the price at which you could reliably expect to sell your car for, person-to-person and without any pressure to complete the transaction on either end.  Such a retail sale may be an order of magnitude higher that that paid at wholesale auction.  In the case of a donated car, tax deductions may not even be worthwhile unless the return on your donation is increased by considering its ultimate fate.

And honestly, you don’t want to see your $3,000 sedan that you’ve spent so much time in be sold for $30 at an auction, tossed on the back of a truck and shipped to a far-off state for dismantling.  Wouldn’t you prefer your car “lived on”  with someone else?  It’s hard to get rid of a car, but at least when you donate a car, tax deductions and the intangible good feeling of donating to someone less fortunate can ease your car-guilt.

Aside from being environmentally unfriendly when long haul transport is considered, there is the matter of a very small sale price.  According to the new guidelines, when you donate a car, the tax deduction is limited to the amount it was sold for, if the car is sold during the first two years after you donate it.

After you decide to donate a car, tax deduction considerations behoove you to do a little calling around and find a local non-profit organization that can actually use your car as part of it’s IRS-approved, charitable mission.

You will find that very few charities conduct their own car sales.  However, educational operations often sell a well-refurbished vehicle at charity auctions.  Such sales often command an price even higher than fair-market value, though you are limited by the extent of your donation rather than what they did to spiffy it up.  Donated cars for tax deductions are certainly not the most lucrative beak on one’s tax burden (credits are usually worth about 3 times as much), but they can be very useful.  Get the most out of yours and help some people in your neighborhood.

Most charities will not accept a car for donation that does not have a free and clear title.  However, if you really want to donate a car in Minnesota, you can request a replacement title.

Of course, this will cost you.  In total, before stamps or bus fare to go down and get them, getting a replacement title to donate a car in Minnesota will cost you about 20 minutes in figuring out the form and as much as $9.  This includes both the filing and title fee.

In addition to this, you’ll have to wait awhile.  It can take as long as six weeks to get a replacement title in the mail, though you can put a rush on the process by paying a few extra dollars.  You’ll still need that title, though, before you can set about on getting that old car hauled away.

One of the advantages the duplicate title process is that you aren’t responsible for the bother and expense of getting current tabs.  Indeed, you don’t even need a licence plate.  It is, in fact, recommended that you take the licence plates off your car before you call the tow truck to come.

When the charity themselves or their third party agents come to haul your car (running or not) away when you donate your car, in Minnesota, you don’t even have to be there.  You can just leave the doors open, everything emptied out except for the keys and signed title in the glove box.  Of course, in most circumstances you’ll simply be there with those items to give to the driver and sign the title away.

According to state law and federal regulation, when you donate a car in Minnesota, you should receive a receipt of transfer right there from the driver.  Very few charities or agents charge a fee for towing services.  Regardless of who picks up the car, ultimately, your charity of choice pays for the tow.  If you live a very long way out, it had better be a decent car, otherwise you’ll want to apply for a salvage transfer from the DMV.

Later, you’ll receive a receipt in the mail outlining the use your car will be put to.  It will also outline the amount your charity received in donated funds if the car was already sold.  Sales of such cars on the wholesale market typically get anywhere from 5-30% of their “fair market” value by the Blue Book.  Most donated cars in Minnesota are sold into the wholesale market for a loss that nets the charity in question, a rather small amount of money at the end of the day.

This is partly true because donated cars in Minneosta have traditionally been covered in rust and suitable only to be parted out.  Putting a “California” body on such a car may be done, but this is usually only the case when students are learning the art of body repair and replacement.  Fortunately for car owners in the state, finishes now are more resilient to salt damage and fewer cars, even in storage, have holes through them.

If used immediately, refurbished to be donated or sold, the value should be close to the “fair” Kelley Blue Book price when you donate a car in Minnesota to a charity that donates cars for use or for the instructional market.

This value is the one used to calculate your 1040 Form deductions.  This amount will be subtracted from your net income when figuring the expenses for your income tax.  For those in middle class income tax brackets, this means that about a third of your deduction will come off your total tax bill.

If you do your homework and spend a little of time on the project, you can still find charities that accept car donations to be actually used as cars.  Often, such services only accept interesting or high valued donations that may have to be assessed by an independent appraiser to verify the value when taking deductions of over $5,000 when donating the car in Minnesota.

What nearly everyone wants to know before they even decide to donate a car to charity is how much it will be valued at.  This requires you to fairly assess what purpose it will likely be used for as well as its true condition.  When consulting the Kelley Blue Book for a generalized appraisal value, many people fail to consider that even a “poor” rating assumes that the car can move without facing downhill and that it’s capable of getting current tags in the state that it’s registered in.

Of course, by the time many people even think to donate cars to charity, they’re often far beyond this point.  Indeed, since a great many charities (or their third-party, for-profit agents) will more than happily send someone to pick up vehicles that haven’t run under their own power since the Regan Administration, you can be assured that even the scrap metal has more value than you might think.

The first thing to do is to take a look at the Blue Book value, for private party sales.  This is the value you can expect to get when you put an ad in the paper and try to sell the car yourself.  Before you donate a car to charity, you need to know what other people are paying for it before you get any grand ideas of whittling your tax bill down to nothing.

There will be a section by where you answer a series of specific questions about the condition of the car.  You may be surprised just how a few small dings can really impact the resale value whether or not you choose to donate the car.  Charity organizations, of course, have the same access to these figures as yourself.  So, be honest.  If you come up with a condition that is less than “poor,” odds are you’ll have to settle for the paltry sum the auto will pick up at the wholesale auctions.

According to a General Accounting Office investigation in 2003, automobiles that were sold this way netted between 5-10% of what the “fair” condition listing was.  Sometimes it’s hard to imagine such a paltry sum for something you’ve spent many hours of your life in.  Tell yourself, “she’s in pain – let her go.”

Unless you’re able to find a charity that will use your car as a car (rather than scrap metal and parts), you’ll have to accept that the charity you choose will get only 30-50% of that revenue after the price of towing is figured in.

If, on the other hand, you’re able to find a charity that has a training program to teach young people the mechanical arts, perhaps  there is a way to get a bit more for your car.  However, if you’ve got a terrible clunker, you probably ought to forget it.  There’s no point in fixing something up if it has no chance of being either valuable or cool.

It may take awhile, but after as many as nine months, you’ll get a slip of paper informing you of what your donated car at charity auction sold for and netted the school you donated it to.  Colleges are also able to receive auto donations that will be refurbished and resold, to your mutual benefit.

It is also useful to consider that you may receive a higher deduction value if your car is refurbished and donated to a needy individual or family in the area.  Some cities run programs like this and are even able to accept should you donate your car to the charity of you municipal government.

Organizations that teach people basic car maintenance and body work are probably not as interested in fast and swoopy-looking cars, but will take a serviceable vehicle that has very little wrong with it.  If you happen to know what the problem is, all the better, as it will give the charitable organization or NPO something to base a decision upon.

So, consider the value of your car when it’s been fixed up, both a little and a lot when you’re deciding what to do when you donate a car to charity  Though not a credit to take off your total tax bill, deductions reduce the income you’re to be taxed upon.  The actual amount of money you’ll save (or be refunded) is dependent upon your tax bracket.

However, by taking some time and effort when you donate a car to charity, you can vastly increase the amount of money your car is worth as a deduction under the new IRS rulings affecting auto donation and deductible amounts.