One thing is for sure: you know that you don’t want your old car anymore. Maybe it’s just past its prime, and you’re ready for something newer. Or, as is often the case, maybe it’s a complete drain on your finances. It keep breaking down, and no matter how much money you spend on repairs, there doesn’t seem to be a light at the end of the tunnel. Regardless of what the specifics happen to be, you’ve got an old car and you’re ready to part ways with it. That’s the bottom line.
So, you explore your options. The most obvious thing might have been trying to sell it online. Maybe you’ve sold a car through an online classified website before, and had reasonably good luck with it. That could lead you to believe that selling your clunker the same way is a good idea. The truth, though, is that trying to sell a junk car to a local, individual buyer isn’t going to be easy. More often than not, it’s actually impossible. Private buyers aren’t interested in junk cars that aren’t in serviceable condition. It goes without saying that dealerships aren’t, either.
That leaves you with two other options. You could call a junk car buyer, junkyard, or scrap yard, and see what they’ll pay for your vehicle. Or, you could find a local charity and donate your vehicle to them. On the one hand, you’d like to get some cash for your junk car. But, on the other, you like the idea of donating to a good cause. Maybe there’s a nonprofit in your area that you’re particularly fond of, and you’d like to make a contribution in the form of your vehicle.
Which option makes more sense? It all depends on your vehicle, your tax picture, and your particular needs and wants. Read on to learn more.
How does donating my vehicle work?
First and foremost, it’s important to understand that if you don’t care about the tax write-off, donating your vehicle is simple. Just call a charity and arrange to have your car towed. That’s that, end of story. If you’re like most people, though, you want to claim the donation as a tax deduction. In that case, you’ll need to take a few things into consideration.
In order to be able to deduct your car, you’ll need to file what’s called an itemized tax return. If you don’t file an itemized return, you won’t be able to deduct the value of your vehicle. Additionally, the charity you opt to work with needs to be a 501(c)(3) tax exempt organization in order for you to be able to deduct the donation. Be sure to confirm this with them before moving forward.
Fair market value
According to the IRS, fair market value as the price that a buyer is willing to pay, and that a seller is willing to accept, insofar as neither the buyer nor the seller is “compelled” to accept the deal, and assuming both of them have a good understand of the facts of the situation. Under certain circumstances, you can deduct a vehicle’s fair market value from your tax return. Talk to the charity you’re working with to find out how they intend to use your vehicle once it’s donated, and whether or not that allows you to deduct the fair market value of the car from your annual income. More often than not, a charity will simply sell your vehicle to a salvage yard, and you won’t be able to deduct fair market value.
Is it worth it?
If you’re in a higher tax bracket, the deduction could be significant and helpful. The value of the deduction could knock you down into a lower tax bracket, and save you a lot of money. More often than not, though, you can end up with more cash in your pocket by working with a junk car buyer directly.
Whether you opt to sell your junk car or donate it to a charity, Junk Car Traders can help you make it happen. In California we have an awesome customer service team that is ready to answer any question you may have. If you want to learn more about donating your vehicle, give us a call at 855-959-1325.