How To Donate Your Car, How to Donate Your Car to Charity, Claiming a Tax Deduction for a Car Donation, Steps to take before donating your car.
 |
| How To Donate a Car |
How To Donate Your Car | digitalskillsguide.com
How To Donate Your Car
Do you have an old car sitting around that you want to get rid of? You could try to sell it and deal with taking photos, answering calls and emails, and scheduling test drives and inspections with prospective buyers.
Or, you could donate your car to charity and potentially get a tax deduction.
Many charities make it easy for you to donate your car. They might even pick it up—in running condition or not—for free. However, if you want to claim a tax deduction for your donation, you must follow IRS rules.
Here’s what you need to know.
Featured Tax Software Partners
Federal Filing Fee
$49.95
How to Donate Your Car to Charity
 |
| How To Donate a Car |
Many well-known and reputable charitable organizations accept car donations, including Habitat for Humanity, Disabled American Veterans, and the Make-A-Wish Foundation.
Local high schools and vocational schools may also take donated vehicles to use in auto shop classes.
The easiest way to go about donating your car is to call the organization or fill out an online donation form. The charity will arrange to pick up the car or have you drop it off at a specific location. And, you’ll be given a receipt to use when you prepare your tax return.
How to Vet Car Charities
When donating your car to charity, take precautions to avoid being scammed or contributing to a questionable charity. If you donate your vehicle to an organization that isn’t qualified by the IRS to receive tax-exempt donations, or if you don’t get the proper paperwork, you won’t be able to claim a tax deduction.
Ensure the organization is qualified to receive tax-deductible donations
Most charitable organizations that are qualified to receive tax-deductible donations have a 501(c)(3) status with the IRS.
If you’re not sure whether an organization qualifies, search for the charity in the IRS Tax Exempt Organization Search Tool, or call the IRS at 877-829-5500 and have the charity’s name and address handy.
Read Also: 12 Best Car Insurance Companies in South Africa 2022
Donate to efficient and transparent charities
Even legitimate charitable organizations may be vague about how they use donations, or might use only a small percentage of contributions on charitable programs.
For example, one controversial car donation program is the Kars4Kids program, which runs commercials on radio and TV nationwide.
According to CharityWatch, an organization that evaluates charities based on efficiency, governance and transparency, while Kars4Kids is a legitimate 501(c)(3) charity, it deceives potential donors by failing to inform them that it serves only children of a particular faith, and primarily in New York and New Jersey.
CharityWatch also reported that Kars4Kids spent more on overhead than charitable programs in 2015—a red flag suggesting the organization didn’t use donations efficiently. But a Kars4Kids report on its operations in 2020 shows most spending (60%) was devoted to its programs that year.
Before selecting an organization to donate to, you might want to look the charity up on CharityWatch or a similar nonprofit database to be certain it shares your values.
Claiming a Tax Deduction for a Car Donation
 |
| How To Donate a Car |
Choosing a qualified charity isn’t the only requirement for getting a tax deduction when you donate your car. To ensure you can claim the full deduction, you must:
Itemize Deductions
First, you’ll need to itemize deductions to benefit from the contribution. If you claim the standard deduction—which nearly 90% of taxpayers do—then donating your car won’t benefit you at tax time.
Gather the Right Documentation
Your write-off amount and the documentation you need will depend on the value of the vehicle and what the charity will do with it. The organization may use the car in its operations or sell it and keep the proceeds.
Regardless of how the charity uses the vehicle, if you plan on claiming that the car is worth more than $500, you must get a written acknowledgment of the donation. That acknowledgment must contain:
- Your name and Social Security number or taxpayer identification number
- The car’s vehicle identification number (VIN)
- The date of the contribution
- Confirmation that the charity didn’t provide any goods or services in exchange for the donation (or an estimate of the value of the goods and services provided)
If the charity sells your vehicle, then your deduction is limited to the proceeds received from the sale — which may be less than you believe the car is worth.
For example, say you donate a car with an estimated value of $3,000 to a charity, but the charity sells the car for $2,000. In that case, your deduction is capped at $2,000.
Once the car is sold, the charity should send you Form 1098-C (or a similar form) within 30 days. The form should contain:
- A statement certifying that the charity sold the car in an “arm’s length transaction between unrelated parties.” In other words, the charity didn’t sell it to an employee or another related party at a discount
- The date the vehicle was sold
- The gross proceeds received from the sale
However, if the charity intends to use the car in its operations, you can deduct the car’s fair market value on the date you donated it. In that case, the written acknowledgment from the charity should confirm that the organization plans to use the vehicle and describe its intended use.
You’ll need to attach Form 1098-C or any other written acknowledgment, and Form 8283 to your tax return when you file it.
Compare the best tax software of 2022
Frequently Asked Questions (FAQs) About Donating a Vehicle to Charity
How do I determine my vehicle's fair market value (FMV)?
Several online vehicle pricing guides can help you determine the fair market value, including Edmunds and Kelley Blue Book. If you use one of these resources, make sure you get an FMV based on the same make, model, year, trim package and vehicle condition. Entering your car’s VIN may help you get the most accurate assessment.
You may want to save the search results to keep with your tax records in case the IRS questions your valuation.
If you intend to claim that the car is worth more than $5,000, you’ll also need to get a written appraisal from a qualified appraiser no more than 60 days before you donate the vehicle. You can learn more about the IRS’ documentation requirements in Publication 4303.
Can I claim a deduction for a car donated to a person?
No. You can only deduct donations to qualified charitable organizations. Gifts to individuals, even if they’re in need, aren’t deductible.
How much is the tax deduction for a vehicle donation?
That depends on what the vehicle is worth and how the charity intends to use your car. If the vehicle is worth less than $500, you can claim its FMV.
If the car is worth $500 or more and the charity intends to use the vehicle in its operations, you can deduct the FMV. However, if the charity sells the car, your tax deduction is limited to the organization’s gross proceeds from the sale.
Ask the charity plenty of questions
Visit the charity’s website. Review its annual financial filings, available here, and its IRS Form 990, which should be available at the above link and here. Consider checking on the charity with an independent charity rating agency, such as the Better Business Bureau's www.Give.org, www.charitynavigator.org, or www.guidestar.org.
Find out what the organization's mission is and how your donation will help it. Ask if your donation can go to a particular program or service that interests you or whether it must go only into the charity's general fund. Do not donate to an organization that avoids talking about its charitable purpose or refuses to send you information.
Ask what the charity will do with your car
Some charities refurbish cars and give them to people in need. Some technical schools use cars in their auto shop programs. Other organizations simply resell the car or sell its parts and use the proceeds for their charitable purposes.
Ask if the charity handles all aspects of your donation
Many charities contract with for-profit companies to handle all the details of motor vehicle donations. If this is the case, ask how the money from your car donation is split between your charity and the for-profit company.
what information i need to donate my car
Here are some basic things you should be prepared to know and provide for the donation:
- Valid car title, free of liens
- Year, make and model
- VIN
- Body type
- Mileage
- Condition
- Date the vehicle was last driven
This is not a complete list. For a full list of vehicle donation needs, please go to the donation wizard and start your donation.
tax benefits when donating a car
Most vehicle donations qualify for a tax deduction. When your vehicle is picked up, the driver will provide you with an initial donation receipt. You may claim as a tax deduction the fair market value of your vehicle up to $500 on your donation even if your vehicle sells for less. If your vehicle sells for over $500, we will provide a 1098-C IRS form which will allow you to claim the full sale price.
Donating a car to charity
Learn more about what to consider if you are thinking of donating a car or other vehicle to charity.
Donating a car is a way to support a charitable organization and benefit from a tax deduction. All donors should be aware that tax deductions for used automobiles, boats or airplanes are available only to those individuals who donate to a qualified charity and who itemize deductions on their tax returns.
Steps to take before donating your car
Have your motor vehicle appraised by a qualified professional appraiser if it is worth more than $5,000.
Make sure you have the title to your vehicle. A charity should not accept your donation without a title. To obtain a duplicate title, visit your local Registry of Motor Vehicles branch or visit the Registry's website.
Take responsibility for transferring the title at the time of the donation. An assignment of title should be made only to the charity or an authorized private, for-profit agent of the charity. The for-profit agent of the charity should be subject to the charity’s oversight in order for the agency to be valid for tax-deductibility purposes. The IRS has published "A Charity’s Guide to Vehicle Donations" (Publication 4302), which details the required terms of the agency relationship.
On the back side of your title, you should assign the title to the charity or an authorized agent of the charity, enter the correct mileage from the odometer, and sign and date the form. Be sure to make and keep a copy of both sides of your title.
Donating a car to charity
Learn more about what to consider if you are thinking of donating a car or other vehicle to charity.
Donating a car is a way to support a charitable organization and benefit from a tax deduction. All donors should be aware that tax deductions for used automobiles, boats or airplanes are available only to those individuals who donate to a qualified charity and who itemize deductions on their tax returns.
Make sure that you are donating to an eligible organization
Tax deductions are available for donations made to organizations that the Internal Revenue Service has determined to be tax-exempt under §501(c)(3) of the Internal Revenue Code. To verify an organization's qualified status, you can:
- search for the organization on the IRS website to determine whether it is on the "Publication 78 Data List" of organizations eligible to receive tax-deductible charitable contributions here; or
- contact the IRS Tax Exempt/Government Entities Customer Service at 1-877-829-5500.
Churches, synagogues, temples, mosques, and governments are not required to register with the Non-Profit Organizations/Public Charities Division or apply to the IRS for tax-exempt determination. They may not be listed in Publication 78, but donations to these institutions are tax deductible.
Guide To Donating Your Car
The biggest winner in the car donation process is usually the donor and not the charity recipient. But if you take your time, ignore the quick and easy television appeals, and find a reputable, high-performing charity that will make the most of your donation, then you can maximize the amount that actually gets to charity and minimizes your risk of an IRS audit.
Find a Charity that Directly Accepts Car Donations
If at all possible, avoid the for-profit intermediary organizations that advertise so pervasively to handle your car donations. By finding a charity that handles the transaction themselves, you can ensure that 100% of the profits remain at the charity. It's possible that the charities you already support have a car-donation program that you don't know about. Check with them first. If not, do a little research, and find a high-performing charity that does the kind of work you like, in the region you wish to target, and does that work well.
Make Sure Your Intended Organization is a 501 (c) (3)
While many organizations can claim non-profit status, donations to 501 (c) (4) organizations are generally not tax-deductible. These are political organizations with permission to lobby our government; like Disabled American Veterans or the National Rifle Association. Make sure your intended recipient has 501 (c) (3) public charity status.
Read Also: How To Make Money With Canva
Transfer the Car Correctly to the Charity
Some charities will ask you to leave the assignment of ownership space on the charity donation papers blank, so they don't have to re-title the auto. If your charity asks this of you, find another charity. If you don't formally sign your car over to the designated nonprofit, you will be held responsible for any parking tickets that are subsequently incurred, or liable if it's used in a crime. Remember, the charity you give the car to will probably not use your car to deliver meals to the needy, but will simply sell it as quickly as possible. When someone buys it from them at auction and doesn't bother to register that car, it's still yours in the eyes of the law.
Use Fair Market Value (FMV) for the Car
There are several exceptions which allow you to use the Kelley Blue Book or a NADA guide, but you must use the FMV, not simply the highest value listed for the year and make of your car. Use the FMV when:
- instead of selling the vehicle, the charity keeps and uses it,
- the charity makes improvements to the car before selling it,
- your car is sold at a discounted price to a person with a low income,
- or if the car is worth less than $500.
Otherwise, you can only deduct the amount that the charity sells the car for at auction as indicated on the written receipt the charity sends you.
Complete Your Paperwork
Non-cash donations are the most common triggers of IRS audits, so it is important to keep thorough documentation of a car donation. Specifically, if your car is valued over $250, then you need to obtain and retain a written acknowledgment from the charity. Additionally, if your car is worth more than $500, you must complete section A of the IRS Form 8283 and attach it to your yearly taxes. Furthermore, if your car is worth over $5,000, then you must have an independent appraisal and fill out Section B of IRS Form 8283.
4 things to know before you donate a car
Editorial Note: Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted.
Do you have an old vehicle sitting around that you’re no longer using?
If so, one option to get it off your hands is to donate it to a charity. Depending on what the charity needs and the kind of vehicle you have, the charity itself may use the vehicle, sell it to a needy individual for a reduced price, auction it off for money or sell it to a salvage yard. In some cases, your vehicle doesn’t even need to be in running condition for you to be able to donate it.
Many charities make it very easy for you to donate your car in just a few steps. Many charities will even pick up your car for free. But if you also want to claim a deduction on your taxes and get a little bit back yourself, the rules are a bit hazier.
Read on for more about how to donate your car and how to take a tax deduction if you’re eligible.
How to donate your car
Steps to stay safe when donating your car
Tax deductions: What to know before you donate your car
How to donate your car
The easiest way to donate your car is to simply contact a charity and arrange for it to come pick up your vehicle. Many of the larger charities like Habitat for Humanity, Goodwill and the Salvation Army offer dedicated services for this, complete with phone hotlines and websites with donation forms. There are even dedicated car donation services like Charitable Adult Rides & Services, which handles all of the details and lets you choose the charity you’d like the proceeds to go to.
If you’re up for a bit more work, another option is to simply sell the car yourself and donate the money. In some cases this can be more beneficial to the charity, since you may be able to sell it yourself for more than the charity could get at auction for it. At the end of the day, it’s your choice.
Steps to stay safe when donating your car
Donating your car to a charity is generally safe. Still, you’ll want to take a few steps to help protect yourself and not be held liable for anything that happens with your car after you give it away.
- Be wary of organizations that sound too good to be true — for example, if they promise that you can deduct however much you want from your taxes.
- Get a receipt from the charity.
- Remove your car’s license plates once you’re done driving it.
- File a transfer form to sign over your title with your state’s transportation or motor vehicle agency.
Tax deductions: What to know before you donate your car
One of the biggest benefits of donating your car is that you might be able to deduct your charitable donation. But just like anything else the IRS controls, it’s not as simple as handing the car over to a charity and then deducting its value from your taxable income. Instead, you’ll need to meet certain criteria in order to deduct the donation from your taxes. You can get more info from the IRS’ guide to vehicle donation.
You’ll need to itemize your deductions
You can claim a charitable deduction (including for cars) only if you itemize your taxes. And unfortunately, with the new tax law changes, most people are better off claiming the standard deduction, so your car donation might not benefit you at all come tax time.
You’ll need to donate to a charity that qualifies
In order for your donation to count as a tax deduction, you’ll need to hand your car over to a registered 501(c)(3) organization or tax-exempt religious institution. You can verify the charity’s eligibility by calling the IRS hotline at 1-877-829-5500 or by visiting the IRS website.
You’ll need to collect certain documents
After you hand off your car to the charity, you should get a written receipt right away. Depending on what the charity does with your car, you’ll also get either a written acknowledgement or a Form 1098-C (Contributions of Motor Vehicles, Boats, and Airplanes) at some point. Keep a hold of this document, as you may need the information to file your taxes, and you may even need to send the document itself in if you’re deducting more than $500 from your taxes.
In addition, if you’re donating a car worth more than $5,000 and the charity doesn’t plan to sell it for cash, you’ll need to get an official written appraisal at least 60 days before you donate the car as well.
Filing the proper tax forms
Most charities sell the cars that are donated to them for money. In that case, you can deduct the car’s final selling price, which the charity will provide to you with written acknowledgement or Form 1098-C.
You’ll need to file the following documents with your tax return, depending on how much you can deduct:
- $500 or less: Nothing in particular, but hang on to your records in case you’re audited.
- $501 to $5,000: File Form 1098-C or the written acknowledgement, plus Section A of Form 8283.
- More than $5,000: File Form 1098-C or the written acknowledgement, plus Section B of Form 8283 and the written appraisal of the vehicle if the charity isn’t selling it.
Bottom line on how to donate a car
Whether you can qualify for a tax deduction from a car donation or not, you can rest assured that charities will be grateful for it. Even your old junker may qualify as a donation since charities can sell it to a scrap yard. So consider donating your car — it’s a great way to clear your yard while helping people out at the same time. It’s a win-win scenario — just make sure to cross all the t’s and dot all the i’s if you do plan on taking a deduction.
Donating your vehicle is easy, here's how:
There are so many great reasons to donate a vehicle! More often than not your vehicle is a lifeline that gets you where you need to go, whether that be work, the grocery store or a child's soccer game. But, like most possessions, they eventually age, break down, become too small for a growing family or just don't fit your lifestyle anymore. When this happens, we invite you to donate your vehicle to AKF and let your old lifeline become the lifeline for a kidney patient. Let your old car, truck, RV or even boat be the reason someone with kidney disease can keep his or her insurance and continue to live a full life. Your car can be a vehicle of change for countless kidney patients.
To donate a vehicle, complete the easy online vehicle donation form below or call 800.936.4356. After completing the form or calling us, our vehicle donation processor, CARS, will contact you by phone to arrange to pick up your vehicle.
When donating your vehicle to the American Kidney Fund you will enjoy:
- Friendly and knowledgeable support throughout the entire vehicle donation process
- Free pick up of your donated vehicle
- The convenience of having your vehicle picked up from wherever it is (home, work, auto shop)
- A tax receipt for your vehicle donation
- Saving yourself the time and hassle of trying to sell your vehicle
- A great feeling of knowing your donated vehicle will help further our mission
