How to Donate Car

People may choose to donate car for the reason that the car is too old or cannot drive. While selling it is not a good option considering that it’s in a bad condition and the selling price is often too low.

Donating car to charity is a very generous and rewarding action. The biggest winner in car donation is obviously the donor, not the charity recipient. But you should take your time to find a trusted, reputable and high-performing charity that can make the most of your donation.

Before donating your car, you should understand its process. Here is the step on how to donate a car:

1) Find a Good Charity that Accepts Car Donation

Try to avoid for-profit intermediary organization to handle your car donation. By choosing a charity that handles the process themselves, you can make sure that 100% of the profits will remain at the charity. Do some research to find a good charity that does the kind of work you support, in your target region, and does the work well.

501 (c) (3)2) Make Sure the Organization is a 501(c)(3)

While a lot of organizations can claim non-profit status, but donating to 501(c)(4) organizations are not tax-deductible. So ensure that your recipient has 501(c)(3) public charity status.

3) Drive Your Car to the Charity If It Can Run

The charity may have to pay someone to handle a tow or pick-up. This cuts into the sum the organization will get. So If you can drive the car to them, you should do it.

4) Transfer Your Car Properly to the Charity

When making a donation, you must sign your car over to the designated organization. If you don’t do it, you will be held responsible for parking tickets that may subsequently incurred, or liable if it is used in a crime. Keep in mind that the charity you donate the car to will probably not keep it and use for their works, but simply sell it to someone else. If the buyer doesn’t register that car, it still belongs to you according to the law.

5) Use Fair Market Value for Tax Deductions

There are many exceptions which allow you to use the NADA guide or Kelley Blue Book. You have to use the fair market value when:

  • The charity keeps and uses the car instead of selling it,
  • The charity repairs or improves the car before selling it,
  • The car is sold at discounted price to a low income person,
  • Or if the car is worth under $500.

Otherwise, the amount you will be able to deduct is the sale price that the charity sold your car for.

6) Complete and Keep the Paperwork

Non-cash donations are common triggers for IRS audits. That’s why it is important to keep all documents of your car donation. If your car is worth more than $250, you have to get and keep an acknowledgment from the charity. If your car is valued over $500, you have to complete section A of the IRS Form 8283. If your car is worth more than $5,000, you must have an appraisal and complete Section B of IRS Form 8283.

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