A Guide to Car Donations

An unwanted or unused car takes up a lot of space. In addition, it often needs to be registered as nonoperational and insured. With the increased popularity of donating cars to recognized charities, consumers now have another option. Here are some tips.

Types

Considerations

Ensure the charity you choose meets the Internal Revenue Service's 501(c)(3) qualifications. The amount of money that will go to the actual charitable work---as opposed to costs and administrative fees---varies greatly. Ask ahead of time to avoid unpleasant surprises.

Misconceptions

It is a common misconception that you can deduct the Blue Book value of the car on your tax return. The IRS has determined that the only amount it will accept for a car donation is the fair market value, which most commonly falls significantly below the stated Blue Book price. Needed repairs, cosmetic work that has not been done, and also the amount of everyday wear and tear the car experienced subtract value from the vehicle. If you believe you are eligible to claim more than $5,000, you are required to obtain a written appraisal of the vehicle first.

Features

Once you have chosen a qualified charity and ascertained the fair market value, contact the charitable organization's representation and set a date for having the car picked up. Have your car title ready and transfer ownership of the vehicle to the charity. Immediately before the car is loaded onto the tow truck, take off the license plates. The person picking up your car will provide you with a statement that identifies the charity by name, certifies its 501(c)(3) status and states that you did not receive and goods or services in exchange for the donation.

Warning

Although it is not necessary for the car to be in tiptop shape, the majority of charitable organizations require that it has all of its parts, or at least an engine and exhaust system. A car that does not meet these expectations most likely will be refused and you may either have to pay for the tow service, or provide your own means of picking up the vehicle from the charity lot.

Potential

Charities have realized that accepting cars as donations is a lucrative means of adding funds to their coffers from donors who might not have otherwise come forward. This has inspired many such organizations, such as Habitat for Humanity, to also accept other vehicles. This offers you the potential of getting rid of your unwanted vehicle; it also greatly increases the amount of the tax deduction you may claim. A link to Habitat for Humanity's vehicle donation site is included in the resources.

Resources

• IRS Publication 4303 explains about car donations and write-offs at the IRS.gov site.
• At the CharitableAutoResources.com website you find a centralized donation agency.
• Donate your car, truck, RV or boat at Habitat for Humanity's Habitat.org site.