How to Donate a Car and Get a Charity Deduction

Donating a car to charity helps you avoid the hassle of selling it or otherwise getting rid of it – and you can feel good knowing that the charity benefits from your donation.  Not only that, but you also earn yourself a charity tax deduction at the same time – sounds like a win-win situation!  It's not as easy as dropping the car off in the charity parking lot though; here are some tips to help you donate a car and get a charity deduction:

Select a Charity

Not all charities accept cars as donations, but a growing number of reputable charities do.  Try using the Charity Navigator  to research various charities and whether they accept car donations or not.

In order to be eligible for a tax deduction, the charity you donate to must be an IRS-approved 501(c)(3) organization.  Most churches and synagogues, temples or mosque's will qualify but it's a good idea to look into if first. 

Try to Go Directly To the Charitable Organization

There are a number of organizations that advertise all over the place, including TV and Radio to “help you” donate your car to charity.  While they may make the process easier for you, keep in mind that these organizations keep between 50 and 90% of the value of the car for themselves, and the charities get much less than if you had donated it to them directly.   

Also beware that some of the organizations that assist individuals in donating their cars to charities pay a flat rate for the donation, regardless of it's value – and this type of donation is typically not tax deductible.

Deliver The Car Yourself to Maximize your Donation Value



While many charities offer the service of picking up your donated car, if you have the charity pick up your car, they have to pay someone to do that.  You can make your donation go further by dropping off the car yourself.

To avoid any problems with parking tickets or violations after you deliver your car, you will want to go to DMV and have the vehicle re-titled to the charity.  It would be quite a surprise to get a few tickets in the mail for violations made using your car after it was donated, don't you think?

Get a Receipt for the Sale of the Car

Most charities accept car donations so they can turn around and sell the car for the cash.  If the car sells for more than $500, the IRS will require evidence of the sale if you hope to get a charity deduction on your taxes.  Get a receipt from the charity when they sell it and file IRS Form 8283 on your tax return.  If the charity is keeping the vehicle to use in the charitable work, or the sale brings in less than $500, you don't need evidence – you can just report the fair market value according to the Kelley  Blue Book or another reputable source as the donation amount.

On the other hand, if the car you donate is worth more than $5,000, you'll also need an outisde appraisal stating the vehicle's fair market price and proof of the donation, like a receipt from the charity to you.  In addition, you will need a copy of the title change showing the charity as the new owner of the vehicle.

Keep All Paperwork

In order to ensure you qualify for the tax deduction, just keep all paperwork associated with giving the car to charity in case you need it when you file your taxes.  

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