How to Donate Your Car to Charity

Old Car With Plants
Orestes Chouchoulas,

Thinking about getting rid of that old clunker that’s been sitting in your driveway far too long? Are you itching to upgrade your existing ride to something a bit more contemporary? You’ve got plenty of options. You could slap a FOR SALE sign on the windshield, put an ad in the local paper, and see if there are any takers. Or, you could do something with more impact – donate your car to charity – and get some good karma in the process.

When to Donate Your Car

Deciding to donate your car to charity instead of selling it can be an easy decision for some. Maybe you don’t have the time or energy to sell your car, especially if it’s currently inoperable.  Even if your car is nothing more than a permanently parked ‘planter,’ that donation can still be a great help since many charities have resources to get that car back up and running.

If you’ve got a favorite charity that you’re unable to support financially, donating your wheels can be a great option. In turn, the charities can either resell the car, and put the profits toward their programs, or give it to a family in need. Either way, donating a car is a great way to make a positive impact on your community.

When Not to Donate Your Car

There may be certain circumstances under which donating your car may not be the best choice. Ultimately, your decision will hinge on two crucial factors: whether you want to make money from your used car, and whether you want the burden of additional paperwork come tax time. It’s important to know ahead of time that donating your car won’t net you any cash. The only financial benefit you’ll reap from it is the ability to write your donation off as a tax deduction, which could get you a tax break. This can be a bit tricky, however, because the IRS only allows you to claim the “fair market value” of the car. This rarely aligns with its Blue Book value. You’ll also be required to keep all documentation of your donation, including paperwork received from the charity organization.

Check Out:  7 Reasons Buying a Car is Smarter Than Leasing

How to Claim Your Vehicle Donation on Your Taxes

The IRS has explicit rules and regulations about donating vehicles in order for you to be able to claim your car as a tax deduction. For example, the charity has to be a 501©(3) organization. Here’s an online tool the IRS provides to help you determine if the charity of your choice qualifies. Also, you’ll need to itemize your deductions. This means going a step beyond filing a simple Form 1040 and filing Form 8283, Noncash Charitable Contributions. If the fair market value of the car is more than $500, you’ll have to complete Section A of Form 8283. If the fair market value is more than $5000, you’ll also need to complete Section B, which requires you to get the signature of an authorized person at the charity. You’ll also have to attach a written appraisal from a qualified appraiser approving the value you’re claiming on your return. Learn more by heading to the IRS’ site. Of course programs, like Turbotax, will help make the process easier.

Time to Pick: Which Charity Deserves Your Car?

There are thousands of charities to which you can donate your car. Just about every one of them, from the Make-a-Wish Foundation to the American Cancer Society, accepts vehicle donations. But before you donate your car, be aware that there are many scam organizations out there. There are also many legitimate organizations whose methods are rarely effective at funneling the optimal value of your donated car to those in need. Prior to picking a charity, talk directly to the organization and ask some of the following questions: If you’re picking a lesser-known charity, here are some key questions to ask:

  • Will your car be given to someone in need?
  • If it’s instead fixed up and resold, how much of the profit will actually go to the charity?
  • Will the majority of the proceeds go to administrative costs, or into the hands of the needy?
Check Out:  Cost of Owning a Car Now Over $9,000

Depending on the answers you get from different charities, you might decide that one organization will do more with your donation than another.