The Pros And Cons Of Scrapping Your Old Car Versus Making A Charitable Donation
An old car that no longer runs doesn't hold much value until you decide to do something with it. If your goal is to get rid of a non-working car quickly, two of your best options consist of donating it to charity or selling it for scrap metal. Both choices enable owners to receive some form of financial benefit, but you will need to know if you prefer earning cash or getting a major tax credit. Review all of the pluses and minuses associated with scrapping your old car against giving it away to charity so that you can get the best value.
Sending Your Old Car to the Scrap Yard
When a non-working vehicle is scrapped, it is taken apart or crushed so that the maximum amount of money can be obtained. The doors, windshield, seats, and any working parts under the hood may be sold piece by piece to mechanics and motorists looking to repair their old vehicles. The frame of the vehicle and any parts that cannot be salvaged are then crushed for recycling purposes.
The main downside associated with selling an old car for scrap metal is variable pricing. It can require considerable effort to receive what you consider to be a fair value, so if the aim is to conduct a fast transaction, you might end up needing to receive less money than you want to. Most scrap yards will tow your non working vehicle from your home and either give you cash or a check in exchange for that old eyesore taking up space in your driveway.
Used Car Donations to Charity
According to the American Institute of CPAs, the only way you can deduct a charitable car donation is if you submit an itemized tax return with adequate proof of fair market value from a tax-exempt charity. In other words, the process of donating a car to charity and getting a tax credit from the IRS is more complex than it appears on the surface. Non-working vehicles don't hold much value to the IRS, mainly because major repairs would have to be made before the car could be sold or auctioned for a significant profit.
This is not to say that donating a used car to charity can't provide you with considerable relief from the IRS, but you will need to spend a little more time preparing your tax return than usual. Any car donations made to charity need to be documented carefully by both the you and your charity of choice so that you are eligible to receive the largest deduction available.