Is Cash for Cars more beneficial than a donation for tax relief?

Should you donate your car?

The most obvious benefit in regards to donating your car is  the tax break you can receive. But there is more to it than that. You may think a donation would make financial sense, this is not always the case.

What should you do?

What is the best course of action? Donate your vehicle, or call a service that will offer cash for your car?

Consider these tax requirements for deductions:

• First off the charity must qualify as a 501(c)(3) organization in order to offer to a tax deduction. ( If that is something you need to find out you can confirm it through the IRS website, additionally you can call them at (877) 829-5500.)
  

• You may only deduct Fair Market Value under very specific conditions. You must:
  

           - Itemize your deductions
           - If you use a 1040 tax form it must be your only deduction
           - If your going to use a 1040EZ you can not deduct anything for that                   car!

• The Charity must plan to use the vehicle in it's work

            OR

• The Charity sells/gifts your vehicle to a needy person at a rate below fair market value

            OR

• If the Charity will be making material improvements to your vehicle in order to extend it's life. Minor services will not count.
• If the Charity decides to auction your vehicle instead of use it, they will try to get as much money as they can from the auction. But if they make a total of $500 or less, you may only deduct the fair market value or $500 you get whichever amount ends up being less.
  

Fair Market Value?

The thing to remember about fair market value is that it needs to be completely objective. Its hard for any car owner to look at their car and see it for what it truly is. Try using sites like Kelly Blue Book to determine value but have someone that doesn't care about your car help you determine the condition. Honesty with yourself is probably the best policy for determining your junk cars value.

Receiving Fair Market Value is not common. Few of the cars picked up by charities are fit to give to the people they want to help.

In fact the CEO of 1-800-CharityCars Brian Menzies, told Edmunds.com

"If 5 percent go to our clients, I'm thrilled,...Although we take any car, about one-third go straight to salvage, i.e., junk...The rest are auctioned and the proceeds go to the charity of the donor's choice"

So a $500 tax deduction doesn't seem so bad right?

What it comes down to is your tax deduction does not equate on a dollar to dollar ratio.
The benefits you will reap entirely depend on your tax bracket. If you happen to be in the 15% tax bracket and donate a car that is worth $1,000, your reduction in taxes will be $150.
Most vehicle deductions are only $500! If you do the math the average person who donates a car to charity only gets a $75 value out of it, and the worst part is you never even get to see that money.

Well what should you do instead then?

There are plenty of companies that will buy your car running or not! Kar Toad Towing in Salt Lake City, Utah is one of those companies. We offer $200 or MORE for any complete vehicle with a title. Hop on over to our Cash for Your Junk Car Page to see exactly how easy making money can be! We pay cash upfront so you can walk away knowing exactly how much you made. No messy tax code, no ridiculous requirements.


If you wish to learn more about cash for cars call us at (801) 974-9561. We would be glad to answer your questions, and set up a time that's convenient for you to have us remove your vehicle.