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.

DO:

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:

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.