5 common mistakes to avoid when donating a car
5 Common Mistakes to Avoid when Donating a Car
Owning a car is certainly a dream for many, and donating an old car is a noble way to fulfill this dream for someone who cannot afford a brand-new car. Old cars may be donated at auto auctions, directly to someone in need, or through charitable organizations or NGOs. In any case, one needs to avoid certain common mistakes when donating a car, so that it reaches the right persons in a hassle-free manner.
Forgetting to terminate one’s car insurance
A common mistake is forgetting to cancel one’s car insurance after donating the car. It is easy to overlook this step, because car owners may want to retain their auto insurance till the day they donate their car. And this is a good practice to ensure that one is covered in case of any damages even during the last few days before the car is donated. However, in these cases, one should set reminders to terminate the insurance plan just before donating it.
Not researching well on the charitable trust or organization
If one is donating their car through a charitable trust or organization, one should research well on the trust’s background and genuineness, so that the car reaches the right hands. It is a good idea to check the organization’s website and online presence as well as reviews and word of mouth. If possible, one should visit the organization and speak with the authorities personally to ensure their credibility.
Not being present for the delivery
Some companies might levy charges to deliver the vehicle, so it is best to try and be present during the delivery to avoid such additional charges. Also, being there when the car is being delivered to the concerned person gives a personal touch to the whole activity and leaves a good impression on the person who is about to receive it.
Overlooking tax deductions
Car owners can reap the benefits of considerable tax benefits when they donate their cars. But there are certain specific conditions that may apply for such benefits, depending on the model of the vehicle, its condition, and how old it is. For example, the IRS states that if the deduction is over $5,000, one would have to produce a note that says the vehicle was worth the amount being claimed. So, one should be aware of such rules and apply for tax benefits accordingly.
Not securing a receipt of donation
Having a receipt is proof of the philanthropic activity and might be required when claiming tax deductions. It also help one maintain records, in case it is needed for reference in the future. So, one shouldn’t forget to collect a receipt of donation upon donating their car.
Donating a vehicle in a good condition is a must, because the beneficiary of the vehicle may not be in a financial position to undertake repairs. So, any repairs needed on the vehicle should be done before it is donated.
References
https://www.vehiclesforchange.org/blog/3-common-car-donation-tax-deduction-errors/