My brother thinking donation his old car for reduce tax ? Or sell it

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My big brother having a old car that he been park for 5 years . It’s running but it shut off sometime while he at the red light . Anyway he been park in the garage ever since

He just mention to me that he might donation it and they write something so he can get tax reduction .

I told him . Just sell it mabe it’s a better deal then tax reduction

What y’all think ?
 
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What is the actual amount of the tax deduction VS the selling price of the car? For example a $5000.00 deduction will most likely not give you $5000.00 cash back.
 
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Well, what are the following numbers:
How much is the car worth, what you can really sell it for?
What tax bracket is he in?
Does he itemize deductions?
Most reputable charities will give you a written receipt.

Answer these questions and I will run all the info through the Great Archer Driver Tax Processing machine and give you the answer. No charge.
 
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I dug into it at one point and a lot of the "charities" that offer to pick up your car, etc keep most of the money for themselves to cover "operating Costs". If he has a charity he likes sell the car and hand them the cash, they will make better use of it than trying to manage a car donation.

He also has to be in a scenario that he is itemizing deductions. With the tax change a few years ago a lot less people are left in that situation.
 
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We used to donate a lot of stuff and the places gave us a blank "receipt" that we filled in ourselves with whatever values we wanted. We have never donated enough that it made a difference on our taxes. I even played with made-up values to see when it would kick in - but did not leave it like that. Since it made no difference, I left the donation off of our return.
 
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From what I understand, you can only deduct the market value, not the book value. So from the description, it sounds like a few hundred dollar car so depending on your tax bracket, it might not get you more than a $200 or $300 deduction. Anything on Craigslist that runs should bring more than twice that.
 
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In all likelihood your brother takes the standard deduction for federal income tax purposes. If that’s the case there’s no tax advantage in charitable donations. But it would get that car off his hands and be just a nice thing to do.
 
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Yes - see what they will value the car donation for and run the numbers. It is easy to donate; there is no hassle. But cars seem to be made of gold nowadays, so there is probably more value in selling it. Good luck.
 

FZ1

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My big brother having a old car that he been park for 5 years . It’s running but it shut off sometime while he at the red light . Anyway he been park in the garage ever since

He just mention to me that he might donation it and they write something so he can get tax reduction .

I told him . Just sell it mabe it’s a better deal then tax reduction

What y’all think ?
Your right. Sell it.
 
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From what I understand, you can only deduct the market value, not the book value. So from the description, it sounds like a few hundred dollar car so depending on your tax bracket, it might not get you more than a $200 or $300 deduction. Anything on Craigslist that runs should bring more than twice that.

If the charity sells it, you can only deduct the price they actually sell it for. It depends on how the charity actually uses the car.
 
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If the charity sells it, you can only deduct the price they actually sell it for. It depends on how the charity actually uses the car.
It's about time someone mentioned this. You only get to deduct the actual cash value that the charity got. Used to be if you had a 5k car and the engine was blown, then you got to write off 5k and if you were in the 30% tax bracket (to make the numbers easy), you got 1.5k off your taxes and maybe it wasn't worth that if you tried to sell it. Now if the car's book value is 5k if it was in good running condition, if the charity only got $500 for it because of bad condition, you only get to write off $500. Because of that, you're always better off selling it than taking the tax deduction. Selling it gets you the actual cash value of the car. Donating it gets you the deduction value of the actual cash value of the car if you itemize so for maximum monetary gain, always sell it directly. Only donate if you really like the charity and was going to donate to them anyway.
 
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Financially speaking, it is better to sell it and cash out instead of taking a tax deduction (you can only deduct what it is worth not the KBB).

Convenience wise, donation is much easier than to list, show, sell, and then worried about people wanting to return it after trashing it.
 

ZeeOSix

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My big brother having a old car that he been park for 5 years . It’s running but it shut off sometime while he at the red light . Anyway he been park in the garage ever since

He just mention to me that he might donation it and they write something so he can get tax reduction .

I told him . Just sell it mabe it’s a better deal then tax reduction

What y’all think ?
What's the car really worth, and what's your brother's tax rate? If the car is actually worth say only $2000, and he pays 20% tax, then his tax savings will only be around 20% of $2000 = $400.
 
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My big brother having a old car that he been park for 5 years . It’s running but it shut off sometime while he at the red light . Anyway he been park in the garage ever since

He just mention to me that he might donation it and they write something so he can get tax reduction .

I told him . Just sell it mabe it’s a better deal then tax reduction

What y’all think ?
In my area, you get to deduct off your AGI the amount which the charirty actually sells it for. He will likely net more money by selling it.

He will also have to itemize his deductions on a schedule A form if he qualifies. Most don't exceed their standard deduction to be able to itemize. So it may not help him by donating depending on his situation.
 
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From what I understand, you can only deduct the market value, not the book value. So from the description, it sounds like a few hundred dollar car so depending on your tax bracket, it might not get you more than a $200 or $300 deduction. Anything on Craigslist that runs should bring more than twice that.
Oh yeah, you left out a few points. You only get to deduct the actual value that the charity received not the market value. The charity should get market value but if they sold the car and only got $400 when you think market value might be $500, you get a letter from the charity that said they got $400 for it and that's all you get to deduct. If you're in the 20% tax bracket, you get to save $80 on your taxes if you itemize. Much better to just pocket the $400 directly. You are no longer allowed to put down what you think the market value of the car is, you only deduct whatever the letter from the charity says.
 
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I dug into it at one point and a lot of the "charities" that offer to pick up your car, etc keep most of the money for themselves to cover "operating Costs". If he has a charity he likes sell the car and hand them the cash, they will make better use of it than trying to manage a car donation.

He also has to be in a scenario that he is itemizing deductions. With the tax change a few years ago a lot less people are left in that situation.
In many cases you get to deduct only what the charity sold it for not the price in KBB. If the charity fixes it up then you can determine the price yourself. That was the deal when I donated my old boat.
 
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