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Step 1
Determine a charity to donate the car to. There are many worthwhile organizations that would benefit from your car donation, but in order to take a tax deduction for your donation, the organization must have tax exempt status. If you do not have a charity in mind, use of the resources below to find an organization that appeals to you, or check the IRS website for a list of tax exempt organizations. If you do not intend to take a tax deduction and would like to simplify the process of donating your car, there are 3rd party intermediary organizations that do the leg work for you. These organizations match you with a charity in need and deliver your car for you as well as complete the necessary paperwork. See the resources section for a link to such an organization.
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Step 2
Determine the value of your car. Use the Kelley Blue Book to determine the fair market value of your car. Note that you cannot take the full value, but must use the value that corresponds to the condition your car is in. Note also that since 2005 the IRS rules governing the amount you can deduct for the value of your car have changed if your car is worth more than $500. In this case, if the charity you donated to sells your car, in general you are limited to their sale price as the value of your car.
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Step 3
Prepare your car for pickup. Whether you decide to hand your car over directly to a charity or a 3rd party organization, you must sign the title over. Make sure to remove your plates before giving your car up, since the car will still be registered to you until the title is officially transferred.
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Step 4
Obtain the appropriate paperwork. If your car is worth over $250 and you plan on taking a tax deduction, you must obtain a written acknowledgement from the recipient of your donation. The written notice must include the name of the charity, a description of your car and a statement indicating whether or not you received anything (goods or services) in return for your car. This statement does not need to be attached to your tax return, but should be retained for your records in case of an audit.
If your car's value exceeds $500 and you wish to take a deduction, you will need to fill out Section A of IRS form 8283 and provide this to the IRS when filing your taxes.
If you car's value exceeds $5000 you will need to fill out IRS form 8283 Section B and provide a written appraisal for your automobile.
Depending on the value of your car, the recipient of your donation may need to complete IRS form 1098-C and provide a copy for you. This form will indicate the value of your car based on their sale or use of it and must be attached to your form 8283 when filing your tax return. -
Step 5
Contact your motor vehicle department. Make sure to update the status of your car's registration with the department of motor vehicles for your state.
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Step 6
Add the value of your car as a tax deduction on form 1040 schedule A and be sure to include all necessary paperwork when filing your tax return for the year.
