What is Car Donation
Car donation is the process by which someone donates their car to a non profit organization so that the proceeds can be used for something good. These organizations can be for any good cause such as children, cancer, or the homeless. The person donates their car for what is considered the current blue book value for tax purposes. They receive a receipt from the organization that can be used as a tax write off or deduction from that year's taxes. People donating their cars may not be getting any money from it, but they will receive a tax write off on what the Kelley Blue Book feels is the current value given the conditions and mileage on the car.
If the person sells the car for more then what it is worth, they would have to claim this money as a gain on their taxes. This would cause them to have to pay taxes towards that gain. However if they sell it for less and incur a loss, this can not be a deduction against their taxes unless the buying and selling of automobiles is their primary business. Donating the car eliminates all of this. The car is considered a donation to a non for profit organization for a good cause. It also helps a lot when the organization gives you a receipt showing their name and address. This shows that the donation was legitimate. Some people may make up donations so they can receive the tax deductions, so it is always a good idea to have some proof or back up paperwork.
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