Do you have a car you no longer need or is no longer working? Have you ever considered donating your car for a tax deduction?
If a tax deduction is an important consideration for you when donating a car to a charity, this guide will serve as a valuable resource.
Car donations to charities are a great idea for the donor since it provides the following benefits:
- You can get a nice tax deduction on your car donation
- You will save time and headaches over trying to sell your car
- The receiving charities will tow your car free of charge even if it is no longer running
- Find a charity that serves your local area that will accept your car donation without charging a removal fee. Most reputable charities do not charge any type of fees.
- Make sure the charity is a registered 501(c)(3) charity or qualified religious organization that can lawfully accept your donation and from which you can get a tax deduction. For more information check out our article on “How to Select a Charity for a Car Donation“.
- Determine the fair market value of your car. This can be done by using the Kelley Blue Book or IRS Publication 526 (“Charitable Deductions”) and 561 (“Determining the Value of Donated Property”). See our article on “How to Determine the Value of Your Car for Donation“
- Get a tax receipt with the charity’s name and federal tax ID number, donor’s name, date of donation, year of car, car make and model of the donated car. See our article on “What are the Recordkeeping and Filing Requirements for your Car Donation“.
- Notify the DMV and your insurance company that you no longer own the vehicle. Follow state regulations on what to do with the title and plates. Keep the receipt and completed IRS Form 8283 for tax time.
- Make sure there are no removal or towing fees from charity
- Ensure that the charity is a registered 501(c)(3) charity or qualified religious organization
- Determine the fair market value of car
- Get tax receipt from charity
- Contact DMV / Insurance and get completed IRS Form 8283
Before you donate your car to a charitable organization for a tax deduction, please read the following articles on this site: