Tara Baukus Mello
I'm ready to replace my car. I don't really need the money from a trade-in, but I'm not sure I want to do the legwork to sell it privately. Would it be better financially to donate my car to charity?
The IRS clamped down on what it called "overvalued" contributions of cars about 10 years ago.
According to Jeff Schnepper, author of "How to Pay Zero Taxes," the charity you donate your car to must tell you the actual price it sold for and provide you IRS Form 1099-C within 30 days of the sale.
Your deduction is limited to this amount, which may be far less than the so-called "book value" of the car. Since you won't know how much the charity sells your car for until after it sells it, it's probably better to negotiate a good trade-in price with the dealer or sell your car privately, unless you really need the tax deduction.
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