It has become a regular practice for Americans to give away their used cars to ‘charities.’ It is a great way to save yourself some dollars by gifting the unwanted vehicle standing in your garage while carrying out a charitable act.
Are you also planning to donate a car to be saved from huge taxes? Well, you should plan your steps wisely; otherwise, there are chances for you to get caught.
It is not an easy job or as simple as it looks. Maybe you can be fortunate enough to have a win-win situation but in reality, the chances are quite rare. If the donor is caught by the taxman while carrying out this activity, he/she might have to face major consequences.
This article will highlight the threats that are included in donating a car, factors to consider while you wish to donate your car to the charity, and how to donate your car to the charity.
What are the signs of manipulation in the charity industry?
Many attorneys and lawyers from multiple states have clearly stated that the charity is being manipulated with car donations. According to them, the whole charity industry is filled with fraud and misrepresentation of the donors and their donations.
At the end of the day, donating a used car could be the least cost-effective way to give to a charity, says Stephanie Kalivas – Analyst CharityWatch. According to her, most of the charitable funds and organizations are doing false marketing and advertisement of their good works. The majority of the charity firms are working for the sake of profits and donating the least amount or percentage of the whole amount for the authentic targets.
According to specialists, charitable firms are not transparent about their work and they tend to exploit the real people in need.
A fine example could be the Kars4Kids. It is a New York-based organization working for the so-called benefit of needy human beings. According to a survey on their website, it was found out that around 450,000 cars were donated to the organization. Well, that is quite a number. However, the charitable organization received a ‘D’ rating from CharityWatch as they were aware of their evil steps.
Around 50 percent or even less than that was used for the real purpose and the rest of it was consumed by the authorities who are running the firm. Moreover, when the organization was cross-questioned about their spending patterns, they had no money trail to prove about the money which was utilized for the benefit of Jewish children. So, this is a clear depiction of how this cruel industry works and how the noble work of donating a car is working in the opposite direction.
According to experts, it would be great if you dispose of your unwanted car by yourself in case of saving yourself from taxation. This way, you can directly send the money or the proceeds to the charitable funds, and this way the process would be smoother.
Moreover, instead of donating cars randomly to any firm, people can get in touch with charitable organizations that are running the ‘donate a car’ program.
Nevertheless, while you battle to save yourself from the taxation, try to be aware of all the hurdles and the red flags in your way. As the Internal Revenue Service auditors can be after your life and you might end up in a prison.
As stated above, you must be very careful when donating your car, hence, below we will identify a few factors that you must be knowledgeable about before making the move.
Factors to consider while you donate your car to the charity
It is always to return to your society. Many human beings are literally in desperate need and you can surely become one source for them. However, you should be aware of the liable ways to donate a car to the charity and how to minimize the risk involved in it.
Let’s discuss the factors to consider while you carry out the noble act;
Always look for reliable charities
This is a manipulative industry, so it might be hard for you to search for an organization that is doing the right thing. However, various firms evaluate the charity work of everyone in the business such as – CharityWatch. So, you can take aid from them before you donate a car.
Research about the charitable organization you wish to donate to
There is a specific clause for the non-profit status for every charitable organization which is 501 c (3). It is related to the IRS system. If the organization doesn’t have it, it is not the right place to donate your car.
Transfer the car with the right means
There is a possibility that the charitable organization might ask you not to change the ownership rights to their name. If this happens, you should look for an alternate organization. This is because, if the car is used in any crime which occurs in the vicinity, you will be charged for it due to the ownership. So, instead of coming in the eyes of law, try to make a proper and legal transfer of the car.
Try to use the fair market value
Certain exceptions and cases might help you to sell your car for a higher value. On the other hand, specialists suggest that you should try selling your car at the right price. Moreover, if your car is being donated for a good cause, it should be sold at a fair market price instead of unreasonable rates. Also, if your junkie car is under $500, it shouldn’t be over-valued.
Get a receipt
It is always recommended to get a receipt of everything you buy and sell to maintain the records. So, in the same way, you need to get a receipt after you deliver your car to the charitable organization. This way a record would be maintained and there would be a certified document for a clear presentation of the transaction.
Once you’ve taken all the factors into account, move on to the next step and start the official process of donating your car. To ease your journey, we have given a quick overview of the process.
How to donate your car to a charity?
It is essential to understand the right way to donate a car to the right charitable organization; otherwise, you might be misguided.
These are the 3 steps;
Go to the website or call the helpline
You can either go to the website of a reputable and certified organization and ask them to pick your car. Another way is to call their helpline number and ask for their services.
Provide complete vehicle’s information
Make sure to provide the entire information in regards to your used vehicle, which you wish to donate. If any of the documents are missing, the car might not be eligible for charity.
Schedule the pick-up
After you are done with the two above-mentioned steps, you can schedule the right time and place for the pick-up procedure.
It is good to be part of the great cause of donating a car. However, if the car is being used for personal benefits by the organization, the investment would be wasted. So, it is better to search for the right organization which can be favorable to society.
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