Many organizations run ads urging you to donate cars to charity. The pitch goes something like this: the charities will pick up the vehicles and spare you from having potential buyers come to your home. In addition, you can take a substantial tax deduction for a charitable contribution.
However, unless you are willing to grossly overvalue your contributions, you’re better off selling your old car (or boat or RV or whatever). Say you have an older car with a value of $4,000, as per a price guide. If you donate it to charity, you’ll get a $4,000 tax deduction.
Assuming a 35 percent tax bracket, a $4,000 charitable deduction saves you $1,400. Thus, you have a $2,600 shortfall: you have $1,400 in tax savings instead of $4,000 in cash. You have to decide if your financial loss is worth the trouble you save by giving the car to charity rather than selling it.