10 Tips on How to Donate a Car

Remaining one of the most popular tax-writeoffs, car donations help organizations, churches and individuals who cannot afford their own car. However, donating remains half of the endeavor as proper tax reporting and avoiding scams complete the car donation process. According to charitywatch.com, legislation passed in 2004 now limits the tax deduction that taxpayers can take on car donation to the price at which the charity or organization sold the car for.

Donate Directly To A Charity or Organization

Avoid middlemen, as they can keep a portion of the car's value and not provide all the funds to the charity itself. Contact the charity directly and inquire if they accept car donations.

In order to receive a tax write-off donation, the charity must be a IRS-approved 501 (c) (3) organization. Ask the charity directly of their status or visit the official website of the Internal Revenue Service. Search for Publication 78 to discover all qualifying non-profit organizations available to take your car donation. Ask for a copy of the charity or organization's IRS letter of determination, which verifies their stated tax exempt status with the IRS.

To keep the charity from having to pay a company to pick up the car, simply drop the car off to the proper location.

Ensure that all parking tickets or other driving violations have been paid prior to re-titling the car to the chosen charity or organization. Immediately report the title transfer to the state department of motor vehicle. Always state a new owner on the title. Never leave the donation papers blank.

Get a verifiable receipt from the charity you donated to to avoid further tax problems.

If the car donated is kept for charitable work and not sold, the person donating the car can claim the Kelley Blue Book fair market value for the car.

According to charitywatch.com, non-cash donations remain one of the largest audit triggers, so ensure you have a paper trial covering yourself.

If the car is worth more than $500, further evidence will be required to verify the value. If the car donation values over $500, an additional IRS form 8283 is required with one's tax return. Fill out Section A completely and accurately. It is required of the charity to report what they sold the car for. Enclose this documentation with your tax return too.

For cars worth more than $5,000, an outside appraisal will be required to verify that number. Verify the car's model, mileage and condition of the car prior to getting it appraised. Official documentation of this appraisal should be attached to one's tax return as well to avoid an audit.

When donating a car, you are, in fact, helping someone. However, it is your individual responsibility to pay any penalties to the IRS that result because of a tax reporting error.