4 Tips How To Donate Your Car To Charity

Maybe it sounds simple: “Donate your used car to charity. Avoid the hassles associated with selling it. Score a tax deduction at the same time. Everybody happy, right?” Not necessarily. As the saying goes, the road to hell is paved with good intentions, and it can be surprisingly easy to fumble this well-meaning act.

Read the following tips to be sure you’re making the right moves, before you decide to hand one of your biggest assets over to anyone:

1. Find a qualify  charity. Make sure the charity is eligible to receive tax deductible contributions. Ask for a copy for your records of the organization’s IRS letter of determination which verifies its tax exempt status. If the charities you normally support aren’t equipped to accept such donations, do some homework until you find a reputable charity that is. You can research charities’ track records online.

2. Avoid brokers or middlemen. Lots of profit intermediary organizations advertise aggressively on billboards, TV and elsewhere, offering to help you donate your vehicle to charity. Here’s the catch: These organizations typically keep about 40 percent to 90 percent of the vehicle’s value for themselves, and the charities don’t get what they could have gotten. To prevent this, check directly with charities you admire and find out whether they accept car or vehicles donations.

3. Do the math. Due to the proliferation of car donations, the IRS became increasingly concerned about how taxpayers valued the vehicles they donated to charity. If you still feel compelled to use an intermediary organization (possibly because you’re busy) at least ask the organization how much of the car or vehicles value will go to charity. If the organization simply gives charities flat fees (say, $100 for a used vehicle regardless of its value, or $2,000 a month) your donation may not be eligible for a tax deduction.

4. Know your recipient. In order for you to qualify for a deduction, the charity that gets your donation must be an IRS-approved 501(c)(3) organization. Your mosque, church, synagogue or temple likely qualifies. (Check first just to make sure.). Remember that you're still making a charitable donation, and don't simply give your automobile away to any charity, just because they're a charity. 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.  You also can visit the Internal Revenue Service’s Web site and search for Publication 78 to find other qualifying non-profit organizations. (Just type “78” into the search field on the IRS home page and you’ll be directed to the right publication.)