How to Donate a Car

Donating a car has become a popular way to help yourself while helping others in need. The task of donating a car isn't difficult, but it's important to keep a few steps in mind. Millions of people find a little tax relief by donating their unwanted vehicles to charitable organizations, but remember, only donating your car is only tax deductible if you are itemizing your deductions. If in doubt, talk to your tax professional.

Difficulty: Moderate

Instructions

Things You'll Need:

• Unwanted car
• 501 (c)(3) not-for-profit organization
• Written acknowledgment from organization
• IRS tax forms

How to Donate a Car

1. Make certain that the charity you donate your car to is a 501 (c)(3), otherwise your donation will not be tax deductible. To verify that the charity is a qualified organization, visit the IRS website's Publication 78 and search for charities. If the charity you have in mind is not listed, they are not a qualified organization, and your donation may not be tax deductible. The exception to this is religious organizations, which Publication 78 does not list. When in doubt, call the IRS Customer Account Services at [phone].

2. When possible, deal with the charity directly rather than an intermediary. These intermediary companies can take 50-90% of the value of the car before passing the remaining donation amount to the charity.

3. When you give possession of the car to the charity, obtain a written acknowledgment that includes the name of the charity, a description of your car and a statement that no goods or services were provided by the charity in exchange for the donation.

4. Depending on the amount of the deduction, you may have to file additional forms with the IRS. Talk with your tax professional about the specific forms.

5. Transfer title of the vehicle to the charity. Each state has a different process for transferring titles. Follow your state's official process. If you're unsure, contact your local State Department of Licensing.

6. In the past, the fair market value of the vehicle was determined and used for the amount of the tax deduction. Due to excessively inflated values, the IRS now requires the charity to send you a receipt indicating the exact amount your car was sold for at auction. This will be your tax deduction.