While the Cash for Clunkers [1] program helped many people in the market for buying a car optimize their savings, many people were unable to take advantage of this program (like myself!) because their ‘clunker’ or used car had too good of gas mileage to be counted.
Another downfall was the fact that it significantly dropped the number of available used cars for purchase in the US, since vehicles traded in for the program had to be destroyed [2].
However, if you finally found the perfect new car, here’s how to donate your old car without the need to destroy it.
Donate Your Old Car
What should you do with your old vehicle? Well, if it still drives, but is not good enough to yield a nice trade-in, then consider donating it to a qualifying charity that will use it for driving purposes. Why is that? Well, if the charity uses the vehicle, then you can deduct the vehicle’s fair market value from your taxes.
Your vehicle’s fair market value will most likely be higher than deducting the amount of money the charity makes from selling your vehicle, or scrapping it. Here’s a resource to get you started on finding a charity to donate your car to [3]. Depending on the fair market value of your car, call a representative, and discuss with them about finding a charity that will still drive the vehicle so that you can maximize your tax savings. DonateCarUsa.com [4] is another great resource.
Tax Deduction for Donating Your Car
Please note that you will need to itemize your deductions [5] using Form 1040, Schedule A [6] in order to take advantage of this tax deduction. For more information, check out IRS Publication 526 [7], page 8.
Stay tuned and I’ll be back with information on taking a tax deduction on your new car!