Vehicle Donation to Benefit Non Profits

You must donate to a registered charity to claim a deduction.

Donating a car to a nonprofit takes little work on your behalf and offers the charity of your choice several hundred dollars they can use for their programs. To realize your tax deduction, you need to give to a nonprofit with 501c3 status or another charitable organization, and present the IRS with paperwork as proof.

Guidelines

To claim a deduction on your taxes, you need to donate to a charity, typically a 501c3 organization but not always. Some qualifying organizations don't have a 501c3 designation such as churches, temples or educational institutions. These groups don't need the 501c3 designation to count as charities, so may go out of the way to get it. Before you commit to donating, search the IRS's Publication 78 to make sure your organization counts as "charitable" in this instance.

Process

Once you've certified that your organization counts as a charity, you need to arrange the donation. Typically, you can either give the car directly to the charity by dropping it off -- or arrange to donate through their representative. Charities may assign a company to handle auto donations on their behalf. Sometimes, these companies pocket a large percentage of the money as a fee. Ask the charity how they prefer you handle the donation, then follow their recommendations. To donate the car, you'll need your keys and your title. The title must be in your name to donate. You'll also need to provide basic vehicle information, like the condition of the car and the VIN or vehicle identification number.

Benefits

Aside from the tax incentive to donate your car, you'll feel good supporting your preferred charity. You may be able to give more money through donating an old car than you would otherwise be able to offer the charity. Since you can donate cars in poor condition, charitable donation offers you a way to get rid of old cars that have little or no resale value. The charity can use the funds for operating costs, program development or other purposes. If you want to know how the funds will be spent, ask before you donate.

Tax Tips

If your car is worth more than $250, the charity has to send you a receipt or written acknowledgement for the donation, typically within 30 days after the date of donation or date the charity sells the car. You need to claim the donation on your tax form -- donations of up to $500 get claimed on the 1040 with no additional paperwork. For auto donations to nonprofits worth more than $500, you need to complete a separate form, Form 8283.

References

• IRS.gov: A Donor's Guide to Car Donation; Internal Revenue Service; 2004
• Charity Navigator: How Do I Donate My Car to a Nonprofit?; Kristen A. Lee; 2007

Resources

• IRS: Publication 78 - Search for Charities