OT - Donate your car!

[QuikSand]

Well, as the end of the year approaches, it seems that this colossal industry is gearing up again for its usual media blitz. As a self-confessed sports radio listener, I'm fascinated to see how that outlet just gets hip-deep with the various charities and foundations pushing the concept that people should donate their used cars or vehicles to charity, in exchange for a tax deduction.

First of all, the fact that the sports radio audience has been deemed to be a good target for this is intriguing to me. I'm guessing that the predominantly male audience might respond best to the "it's so easy" argument (which is really the best argument for car donation programs, in most cases, and features prominently in most of the ads that I hear).

I don't know if we have to go through the math here, not donation is generally speaking either a very crummy return on your investment, or else it's a duplicitous way to gouge the government-- depending on the market value of the vehicle (essentially a function of its condition).

As both a "tax policy" guy and a "do the math" kind of guy, I generally fin this laughable. But I have to presume that the annual explosion of promitions has to trace back to the fact that plenty of people respond to them, and (mostly) flush their money away in this way.

So... go right ahead, donate your car to charity. I've got nothing bad to say about the various causes involved, but if what we really want to do is give money to charity, there are many much more efficient ways to do so.

[cthomer5000]

I believe it's much more government gouging than a crummy return.

My father works on cars for a living, and is an insane judge of the market value of a car. He has donated our last 3 "dead" cars to charity. I think that leads me to believe that he's getting an above-average return on donating it. Either that or it's close enough to market value that it's not worth going through the trouble of actually selling it personally.

So I'd guess that people who donate cars and the organziations that accept these donations are personally benefitting while government (and all of us) lose in the long run.

[Alan T]

I have only donated one care to a charity. The case was where it was a poor car, which would have gotten me something back, but in the end not worth the hours and investment advertising or trying to get it ready for a sell. I donated the car to a charity, took all the pictures, and forms that the government requires, and just took a tax write off which was likely a bit less than i could have gotten selling the car.

The time saved however was probably worth more than the money I got back for it. Would I use this to sell my current car? No.. wouldn't make sense to.

[Radii]

What tax write-off are you "supposed" to get when you make a donation like this? The current bluebook value, or what?

[Bee]

Originally posted by Radii
What tax write-off are you "supposed" to get when you make a donation like this? The current bluebook value, or what?

My understanding is you get high blue book (which in some cases may make it worth it if you car is in really sad shape and would be almost impossible to sell).

[Ksyrup]

IRS AND STATE CHARITY OFFICIALS URGE CARE WHEN MAKING A CAR DONATION

Source: http://www.irs.gov/pub/irs-news/ir01-112.pdf

Here are a few quotes from that news release:

“When done correctly, donating a used car to a charity can help both the charity and the taxpayer,” said IRS Commissioner Charles Rossotti. “We want people to take a few simple steps to avoid possible problems and to make sure they get the proper tax deduction for their donation. Don’t get taken for a ride.’’

And the following:


"DEDUCT ONLY THE CAR’S FAIR MARKET VALUE – Some car donation program operators have mistakenly claimed that donors can take the full “Blue Book’’ value of their car for a deduction. The IRS, however, will only allow a deduction for the fair market value of the car. Fair market value takes into account many factors, including the vehicle’s condition. The fair market value of the taxpayer’s car may be substantially different from the “Blue Book” value.


"CALCULATE THE FAIR MARKET VALUE – The donor must take many factors into consideration to establish the value of the car. Many used-car buying guides contain stepby- step instructions so that readers can make adjustments to the value of a car for accessories, mileage and other indicators of its general condition. Both IRS Publication 526, “Charitable Deductions,” and IRS Publication 561, “Determining the Value of Donated Property,” provide detailed instructions. Both publications can be found at www.irs.gov."

[Ksyrup]

Whether this is worthwhile really depends on your circumstances. This is not a tax credit, just a tax deduction. Therefore, it might well be worth having the money in your pocket as opposed to the deduction. And, of course, the deduction is worthless if you don't itemize.

[Alan T]

Right.. there were many warnings when I did it that if you try to pull a fast one, the IRS can and will audit you for it... They are trying to crack down on people who pull a fast one through car donation programs. I am happy with how it worked out for me, but that was only done because of the particular case. If looking to trade in a 3-4 year old car and get a new one, you probably have better bang for your buck not donating it.

[Samdari]

QS, I kind of fail to see your point. While I agree that financially, selling the car is better for one than donating it, since essentially you are getting paid ~33% of the value of the car.

But, isn't that the way with all charitable donations? I donate $1000 cash to a charity, I write said money off, and save $333 on my taxes. Net loss, $666. From a strictly financial standpoint, when does donating to charity (for the average middle class taxpayer) give you a net financial gain?

For someone predisposed to donate to charity, with a car that they need to get rid of, they can accomplish both goals, while saving the hassle of selling the car privately.

As for the commercials, I think that the above case does not happen often enough to make those commercials "profitable" and thus they must be hoping to attract people looking to turn their $1000 car into ~$1333 by writing it off as a $4000 donation. I think it is not hard to find people in this country willing to cheat a little bit on their taxes - since I think most people see this as a victimless crime.

[QuikSand]

My pont, Samdari, is that unless you are overstating the value of your car (in order to cheat on your taxes) you're probably better off just selling the car, and (if you like) donating the receipts to the charity directly. There's little question in my mind that charities who accept piles of lousy beat-up cars are not really getting the best value for them when they try to sell them.

[HornedFrog Purple]

Quik, in most cases the charities don't turn around and try to sell the car again as a whole they sell them to wholesale second hand part distributors. They in turn break up the car, refurbish the working parts and make their money that way by paying dimes on the dollar off the charities.

[Bee]

So, see Quik...it's good for the economy! :D

[Ryche]

I tried donating my old AMC Eagle (one of those station wagons on steroids) to a couple of charities in Minnesota, but they weren't willing to take it. I ended up selling it to my landlord and 2 years later its still running well.

[cthomer5000]

Originally posted by Ryche
I tried donating my old AMC Eagle (one of those station wagons on steroids) to a couple of charities in Minnesota, but they weren't willing to take it. I ended up selling it to my landlord and 2 years later its still running well.

the charities near me will take any car in any condition. You must have some picky charities...ungrateful bastards.

[Alan T]

Originally posted by cthomer5000
the charities near me will take any car in any condition. You must have some picky charities...ungrateful bastards.

Most charities that I know will take any car as long as it is reasonable to assume they will get back at least the cost of the towing.

[Bee]

I can't imagine what a car would look like that you couldn't get the cost of the towing back. :D

[HornedFrog Purple]

Ever seen Planes, Trains and Automobiles? That street machine might qualify.

[cthomer5000]

Originally posted by Alan T
Most charities that I know will take any car as long as it is reasonable to assume they will get back at least the cost of the towing.

I actually wondered if the towing company is actually doing the tow "for charity" as well. It would seem pretty reasonable to me, as they only schedule to pick up your cars at really oddball times (when they are probably doing nothing else).

[Samdari]

Originally posted by QuikSand
My pont, Samdari, is that unless you are overstating the value of your car (in order to cheat on your taxes) you're probably better off just selling the car, and (if you like) donating the receipts to the charity directly. There's little question in my mind that charities who accept piles of lousy beat-up cars are not really getting the best value for them when they try to sell them.

Ah, I see. I thought when you said more efficient, you meant financially better for the donor. If you mean that donating cash directly to a charity is the best way for them to get the most benefit from your donation, I wholeheartedly agree.

[Alan T]

Originally posted by cthomer5000
I actually wondered if the towing company is actually doing the tow "for charity" as well. It would seem pretty reasonable to me, as they only schedule to pick up your cars at really oddball times (when they are probably doing nothing else).

I am sure that some probably do somewhere.. but my impression from dealing with charities was that they do have to often pay for the towing...

And it may seem that is a rather low request to get money back from a tow, but in some cases, a tow could cost $100-$200 and you might be getting a car back not worth that even.

[JAG]

But Quik, you can get a free autographed football from John Riggins for your donation!

I listen to the same stations. :) I'm glad you mentioned it though, because I had been bothered by those ads a bit too, especially the Riggins one who urges you to "donate any vehicle or real estate" to whatever cause and I'm thinking, "Who has spare real estate just lying around? They must be seeking some seriously rich Redskins fanatics out there."

[cuervo72]

There is a variation on this where the charity will provide the cars to those who cannot afford their own, so they don't sell them or chop them up, they actually use them. I can't recall the name of the charity off-hand, but they run TV commercials every now and then.

The funny thing about this is that next year my '93 Saturn (which logs 70 miles a day getting me to and from work) will be too old for them to accept as a donation. :)

[Alan T]

The car that I donated was a 1984 car.. I think some charities don't care about the age as much as the condition and realistic worth..