So you've got a very old car that you no longer want. You've decided you do not want to try to sell it, and you are not interested in trying to bring it to a dealership as a trade in. The two next best options available to you are either donating the car for a tax write off, or selling the car to a junk yard.
There are a lot of factors that can make either the junk yard or the charitable donation the best choice. Let's start with the scenario where the charity is the best choice. For a car donation to work for you, you have to itemize your discounts on your tax return. If you do not itemize, and you just take a standard deduction, then head to the junk yard.
If you do itemize your discounts, the next thing to pay attention to is what tax bracket you are in. Usually the tax pros say the higher your tax bracket, the more sense the charitable donation makes, because you'll be saving more money. That's true, but for those of us in the lower tax brackets, I think even smaller dollar benefits matter. For example, cutting $ 300 from your tax bill if you make $ 250,000 a year may not mean much to you, because $ 300 does not mean much to you. If you make $ 25,000 a year, even a tax break of $ 150 is significant, because those of us making $ 25,000 a year are counting every dollar.
Now that your side of the tax benefits have been defined, the next thing to consider is how much the car is worth. Check the online Kelly Blue Book. This is not the value you can deduct without the charity actually uses your car. Most charities and car donation processors will sell the car at auction, in which case 95% of the time the best tax deduction you can expect is $ 500.
Expect the junk yard to give you half or less of the Kelly Blue Book value for your car. From people I've talked to, most junk yards give from $ 25 to $ 200 for a car, even if it is still running. It is these sorts of rock-bottom values offered by junk yards that make donating a car a viable option. Donating the car becomes an even better choice if you can find a charity that will actually use the car or give it directly to a needy person. Most charities do not do this, but if you hunt a little, the ones that do not hard to find. In this scenario you can usually get the full Kelly Blue Book value for your deduction, but you'll have to get written confirmation from the charity that they're going to use the car themselves, or that they're going to give the car directly to a needy person.
To sum up, if you do not itemize your commitments, it is financially better to bring your car to a junk yard. But if you do itemize discounts and your car is worth at least $ 300 to $ 500, car donation may be the better route. Be sure to check with your CPA or tax preparer so you know for certain what the effects of the donation will be on your tax return.
Keep in mind this is all looking at things purely from a financial aspect. If you want to help a worthy cause, and make even a small difference in our very challenging world, then donating your car becomes even more beneficial.
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