If you want to donate a car to charity, you may feel a little confused about all the steps you need to take. Here is an overview of how to donate your car.
Where to GiveWhen you donate a car, research the charity first. If you want to receive a deduction on your taxes, make sure it has a 501(c)(3) tax-exempt status with the IRS. Sometimes people run into problems when they donate their cars to a charity (i.e. they are unable to receive their tax deduction) because they do not research the charity thoroughly enough.
Find out what the organization will do with the vehicle after donating. Will they fix it? Will they use it for teaching? Will they use it for transportation? Will they sell it or auction it off? Contact the organization and let them know you want to donate a car. They will let you know if they have any specific instructions or steps for you to follow.
What to GiveMost charities will accept many types of vehicles beyond cars, including trucks, motorcycles, boats, motor homes and trailers. The most popular choice is donating a car, but this does not mean charities do not appreciate donations of other modes of transportation.
How Much Is It Worth?If you want to donate to charity, you need to know the fair market value of the vehicle. One of the ways to do this is by using the Kelley Blue Book. You might also use the NADA Appraisal Guides, Edmunds or independent appraisers. The most important thing is to know that you can only claim fair market value on your tax returns when you donate to charity, not full market value of your vehicle. Look to IRS publication 561 for more information.
Keep the documentation of the value appraisal so you can use it to verify the value of your donated vehicle as well as when you send in your tax returns.
Get Your TitleYou need to be able to prove ownership of the vehicle when you donating. Thus, you must have possession of the title to the car. You will then sign the title over to the organization or charity.
Drop off, Pick upMany organizations will come and pick up your vehicle from you when you donate to charity. Others will have you drop off the car to them. When the vehicle exchanges hands, make sure all paperwork is complete and you have documentation of everything. You will need their tax ID number, verification of their receipt of the vehicle, its condition, year, make, model and value.
Reap the BenefitsIn order to receive a deduction on your taxes when you donate a car, you must file an itemized tax return. Look to IRS publication 526, publication 56, form 8283, tax topic 56 and especially your tax adviser for further, more detailed instructions.
By D. Blair Thompson