Before you donate a car to charity, you should realize that it is a little tougher than just dropping your car off at an organization. Here's how to make sure you get the tax break and the charity receives the most it can from a car.
Find a charity that handles vehicle donations through Charity Navigator. Not all charities can handle a vehicle donation. The Better Business Bureau tracks the performance of charities that can.
Avoid the Middleman
Many organizations that take vehicle donations give only 50 to 90 per cent of the money for the car to your charity. Although "not-for-profit," they use the money to advertise for donations. When you donate your car, check with your charity to see if they accept vehicle donations directly.
If you need an intermediary because of your schedule or mobility, check the math. Some intermediaries contract with the charities to give a flat fee per donated car, like $100. Others contract to give up to a certain amount per month, like $3,000. If the value of the car does not go to the charity, you may not receive a tax deduction.
Know Your Charity
Visit the Internal Revenue Service (IRS) Publication 78 to check the charity's status. If it is not classified as 501(c)(3) by the IRS, you may not get a tax deduction when you donate your car. Publication 78 lists all eligible organizations.
Deliver It
A charity has to pay someone to pick up your car. If you drop off your car and get a ride home, the charity gets the most from your donation.
Avoid Tickets and Fines
Transfer the title to the charity and deliver it. While the vehicle waits to be picked up, you can be ticketed. If you leave the title blank and in the car, whoever picks up the car can put their name on the title. Report the title change to your state vehicle registration office, and return license plates.
Get a Receipt
If you donate a car worth more than $500, the IRS must know how much the charity actually received when the car sold to determine your tax deduction. You must have a receipt to prove the transaction.
Fair Market Value
Some charities keep your car and use it for charitable work. You can deduct the fair market value of your car in this case. Find out how much your donated car is worth at Kelley Blue Book.
Keep Records
For donations worth under $500, keep the charity donation receipt. If more than $500, you must file an IRS form 8283. If more than $5,000, you also need an outside appraisal for the value of the car.
 | Research a charity before donating to make sure that the money you give will go to those in need instead of the charity's management. |
 | When you are searching for the best charities to give your money to, it's a good idea to check into the organization's background and history. That way, you can be confident that your donation is truly helping those in need. |
 | Starting a charity is one way to raise funds and support a cause you feel strongly about. You should follow several steps when starting a charitable organization, and proceeding in the right order and with the right knowledge is crucial. |
Would you like to know how to donate your car to help your favorite charity? It used to be that you could donate your car to charity, assign a market value to the car and deduct away. Those days are gone. |
If you were rich, you could give to those in need without worrying about the cost. Most of us aren't, though, and some of us are barely scraping by. If that's where you are, don't stop giving to charity organizations. Instead, get creative. |
