If you have an old car but do not have the time to try to sell it, vehicle donation may be the next best option. Donating your vehicle to charity lets you get rid of your old vehicle, feel good about yourself and pocket a nice little tax deduction. You have to do it the right way, though, or you could miss out on your deduction and even face legal ramifications. Learn what you need to do to make the donation process go smoothly.
Step 1
Choose an organization. It is not enough to just choose an organization you like. You have to make sure the organization is a registered, government-recognized 501(c)(3). This means that the charity has the proper tax exempt status you need to be able to claim your donation on your taxes. Most charities and religious organizations qualify, but always double check.
Step 2
Determine how much your car is worth. You cannot just make this number up based on what you think the car would have sold for. Use a service like Kelly Blue Book, Edmunds or IRS Publications 526 and 561. You can also use a professional car appraisal service, but these cost money.
Step 3
Arrange your donation in advance with your chosen organization. Discuss how you will get the car to the location, who will be responsible for towing fees and how you will get your tax receipt from. Most agencies that accept car donations have pre-arrangements with tow companies, but if you can drop the vehicle off yourself, you will save them the expense.
Step 4
Follow your state's guidelines for transfer of vehicle ownership, including what to do with the license plates, title and registrations. If you fail to complete this step, you could find yourself in violation of state laws. You will also be responsible for any traffic tickets or other infractions that may occur with your vehicle after it has been donated. Also, contact your insurance company and let them know you no longer own the vehicle.
Step 5
Keep good records. Keep a detailed receipt, plus the agency's contact information and use it to submit IRS Form 8283 with your taxes. The government has recently changed the maximum deduction for donated vehicles based on the car's value, so be sure to check with IRS Publications 526 and 561 or a tax professional to make sure you are claiming the proper amounts.
