Getting rid of a broken-down car parked on your property can be tough. Most strategies for getting rid of old cars include you paying to have them hauled away without receiving any compensation. This makes it simple to just leave your car there and come to terms with its ugly presence.
Donating a car is a fast and simple method to get rid of an unwanted vehicle, but it’s important to make sure you’re doing it for the right reasons. It’s a common misconception that donating a car will net you a sizable tax deduction, however, if you’re motivated only by financial considerations, you’re better off selling the vehicle in an old-fashioned manner.
Let’s look at the benefits of both donating and selling your old car so you can weigh out your options.
Benefits of Junking Your Car for Money
Before you choose to donate, consider the advantages and disadvantages of selling instead. The most obvious benefit of selling your vehicle is the money you’ll get. You won’t have to wait until tax season to get the rewards.
You should also consider where you sell your junk car. In this case, a local search would be the quickest and most efficient option. If you live in Phoenix, Arizona, for instance, and you want to sell your junk car for cash in Phoenix successfully, you just need to find some local buyers. A quick Google search will give you the quick results you’re looking for.
In addition, you’ll have more money to donate to the causes you care about. Because selling a car would net you cash rather than a tax deduction, you may contribute more to the causes you care about without burdening them with the sale of a vehicle. Ironically, selling your automobile on your own may net you more money for your chosen charity.
Car Sale Downsides
Getting a car sold might take some time. It might take months for a private seller to locate a suitable buyer. This might be an inconvenience if you’re just looking to get rid of your car and aren’t planning on trading it in for a new one.
There’s also the possibility that you don’t want to go through the trouble of trying to sell your car for the wanted amount, either to a dealer or a private party. In a short amount of time and with no hassle, a charity may take possession of your old automobile.
Advantages of Car Donation
Any amount is helpful to most charities. While not every dealer or individual buyer is interested in an old beater, many charities are. If your vehicle is too old to drive, they will typically haul it away for you. Very little effort is required. Donating a vehicle is as easy as calling a charity and having them come take it up from your driveway.
Giving to charity may help you save money on your taxes. You can help a cause you believe in while also feeling good about yourself. Donating your junker to a salvage yard might earn you several hundred bucks for a good cause.
Downsides to Car Donation
Unfortunately, giving may also have its drawbacks. Gaining access to your tax advantages may need some effort. The paperwork is difficult and sometimes unnecessary.
You’ll need to do some legwork, including reading IRS Publication 78 and filling out Form 1098-C, before you can write off a car donation to charity. This is no easy task, as it requires you to research the charity’s tax status, determine the car’s fair market value, and understand how the charity will put it to use.
There’s a chance your deduction won’t be as large as you anticipate, either. Even as little as $50 has been seen in charity automobile auctions in the past. The entire value of your automobile donation is not tax deductible unless it is being put to use by the charity, as opposed to being sold for profit.
You can assume a maximum deduction of $700. If you sell your automobile for less than $500, you may use the lower of either $500 or the car’s actual market value as a tax write-off.
Is it preferable to junk an automobile or give it to charity? Ultimately, it’s up to you to decide whether to sell it or give it away. For all your good intentions, selling your automobile for scrap metal might be the quickest way to get the money you need right now.
Donating is the better option if you don’t mind waiting for the tax deduction and value the satisfaction of helping a good cause. The most important factor is how you feel, so be sure to take care of your financial position before anything else.