How to Donate a Vehicle

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Donating to charity is a great way to get rid of a vehicle when you don't have the time to negotiate with used car salesmen or don't think you can get what it's worth. Donating a vehicle to a charity lets you deduct its fair market value from your taxable income. This article will show you how to find the best charitable organization for the maximum tax deduction.

Steps

Verify that the recipient is a charity. Make sure the organization is a registered 501(c)(3) charity or a qualified religious organization that can legally accept your donation from which you can rightfully claim a tax reduction. It is also advisable to find a charity that accepts vehicles without charging a removal fee.
Use the Kelley Blue Book or IRS Publications 526 ("Charitable Donations") and 561 ("Determining the Value of Donated Property) to determine the fair market value of your car. If it's worth $5,000 or more, have the car appraised by someone certified.
Donate the vehicle. The Charity will most likely do one of two things: 1.) use the car and bring it in as an asset or for charitable work, or 2.) sell the car and the funds generated will go to the charity.
- If the car is used by the charity, you are entitled to the fair market value of the vehicle (any value over $5,000 can only be deducted after the car has been appraised by a third party appraiser).
- If the car is sold to generate funds for the charity, you are entitled to what the vehicle sold for. You will receive a receipt from the charity that should have the charity’s name, tax ID number, date of donation, donor’s name, and year, make and model of the donated car. This receipt will allow you to claim up to $500 of the vehicle’s value. If the sale value of your vehicle exceeds $500 you will be notified by the charity and be asked to fill out a W9 form (in essence, a request for your social security number). This is needed in order for the charity to file a 1098c form to register the donation with the irs. You will receive a copy of the 1098c form from the charity that shows the sale value of your car.
Request and receive a tax receipt with the charity's name and federal tax number, date of donation, donor's name as well as the year, make and model of the car that was donated.
Follow your state's regulations on what to do with the title and plates after notifying the motor vehicle department and your insurance company that you no longer own or insure the vehicle. Your receipt and completed IRS Form 8283 should be kept in a safe place; you'll be needing it when it comes time to file your taxes.

Individual State Regulations

You can surrender your plates by mail:
- Connecticut: DMV, State Street, Wethersfield, CT 06161
- Massachusetts: Registry of Motor Vehicles, P.O. Box 55885, Boston, MA 02205-5885
- Minnesota: No requirement to surrender your license plates, though you may do so at any branch location.
- New Jersey: Motor Vehicle Commission Customer Advocacy Office, P.O. Box 403 Trenton, NJ, 08666-0403

Tips

If the charitable organization is going to make material improvements to your car donation, you must get written notice within 30 days about the use and duration of such improvements and that the asset won't be sold or bartered until the improvements are finished.
If the fair market value of your vehicle is less than $500, it doesn't matter what the car will be used for. You can take the full fair market value on your tax return.

Warnings

Make sure you choose a reputable company before donating your car
Don't pay for towing - The better known car donation companies will usually foot the bill.

Things You'll Need

Internet connection and computer
Form 1040 for Federal tax return
Title to car you will be donating
Itemized deduction tax form
Used car with some blue book value
Keys to Car

Related wikiHows

Motor Vehicles Departments

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