We Know: The Do's and Don'ts of Donating a Car
Donating a car to charity can be a wonderful way to get rid of a white elephant and help people at the same time. But like anything else that involves government regulation, there is a right way and a wrong way to do it.
- Be absolutely certain the charity you're donating your car to is a 501(c)3 charity. They should give you a letter in thanks (or a receipt) that will state this. Keep this letter with your other tax records as proof of your donation. Information that should be included on this letter includes: charity's name and federal tax ID number; donor's name; date of donation; and year, make and model of the donated car.
- Keep very good records of what you've donated. Take pictures of the car, and if you think it's worth more than the Blue Book value (which you can find online - print this out, as the information on it changes regularly!), keep maintenance records that prove the condition the car was in when you donated it.
- Donate your car before taxes are due on it.
- Donate your car to a charity that will arrange pickup and ensure your paperwork is easy to manage. This will probably be a charity that solicits car donations through advertising, like the American Heart Association.
- Be certain to file a form 8283 with the IRS. This is the standard tax form for non-cash donations.
- After you've donated the car, be certain you notify the DMV and your insurance company, and fill out any necessary forms.
- Do not claim your car is worth more than its book value unless you can prove it. The IRS is pretty strict about what it will accept as a deduction, and if you are deceptive about donations, you can not only deprive yourself of any deduction at all but also leave yourself open to civil and criminal penalties.
- Don't forget that you can donate other things besides cars: boats, RVs, trailers, and similar vehicles or towed vehicles are just as eligible to be donated as cars.
What Else Should You Remember?
Although donating your car to charity does get you a good tax write-off, you should remember the real reason you're doing it: to help others. Choose your charity carefully, and don't just give them a car with no value whatsoever that will be more trouble to them than it's worth.