Car Donation: Read This First!

You’re Ready To Make A Car Donation – Now What?

Donating a car seems simple. Yes, but there are a few pit-falls. So, before you stumble through it you really should take a few moments to gather some good advice prior to making that call. It can be amazingly easy to fumble this well-meaning charitable act.

Ideas, Tips and Advice To Avoid Disappointment

First, you should be clear about your car donation objectives.

• Do you want to maximize your car’s value to charity?
  or,
• Are you just looking for an easy way to avoid the hassle of fixing it up and selling it? or,
• Perhaps, as with many, it’s a combination of both.

Regardless of your motives you really should learn about the basics of what to expect as you move forward with a car donation before you make that call to start the process.

Car Donation Sounds So Simple

Donate a used vehicle to charity, avoid the hassle associated with selling it, and score a tax deduction at the same time – everybody wins, right? It can be surprisingly easy to screw-up this well meaning act.

Car Donation Is A Fairly Simple and Straight Forward Process.

That is, it’s simple and straight forward as long as know about a few important steps, avoid the pit-falls, and you pay attention to details. There are a number of things that can help you to avoid a number of hassles, potential disappointment in amount of benefit delivered to charity, and a very important consideration for some, your tax deduction.

Be sure your ownership documents are in order

Car donation to a charity in good standing will require that the vehicle’s title be signed over to the charity; they must have proof that you have the legal right to give the car away – aka; make a car donation. All legitimist organizations, whether for-profit or non-profit tax exempt charities will require that your vehicle ownership be transferred over to them as part of accepting the donation. For most vehicles, this is simply the “title” document.

Your car should be free of any liens.

Tickets and any other violations may or may not become an issue with your car donation. It depends on their nature and the policy of a given charity, but usually these are not a problem.

You can maximize your vehicle’s donation benefit to a charity and your tax deduction by paying attention to details.

Some Important Tips

• Avoid the car donation middleman. Numerous for-profit intermediary organizations advertise aggressively on television, billboards and other mediums; offering to assist you donate your vehicle to charity. Middleman organizations typically keep about 40 to 60 percent or more of a vehicle’s value for themselves. Charities won’t get the benefit they could have gotten, if at all, and you may not get a legitimist tax deduction or the full deduction you could have. Contact the charities you like directly. Find out whether they directly accept car or boat donations.
   
• Ask the charity about how they use vehicle donations and the various methods or channels they use to reap the benefit of your car donation. Then ask how that affects you and any tax deduction you hope to receive. Most are very well informed about how and what they do with your vehicle will affect you. Any tax deduction that you may be entitle to as a result of a vehicle donation may depend on what they actually do with your vehicle. Using it themselves may entitle you to a very different tax deduction than if they sell it. If the charity gives it away or trades it to a needy person, family or some other organization rather than sell it, it’s a whole different donation game. You really need to find out specifically what they plan to do with or how they will dispose of your car donation.
   
• Seek a charity that accepts car donations without billing you a big removal or pick-up fee.
   
• Find a creditable IRS-approved 501 (c)(3) charity organization. If the charity you normally support isn’t set-up to accept a donated vehicle do some homework until you find a reputable charity that is.
   
• If you feel compelled to use a middleman organization because of time constraints – at least ask them how much of the value will go to charity. If the organization simply gives charities a flat fee — say, $75 for a used vehicle regardless of value, or $1,500 a month, your donation may not be eligible for tax deduction.
   
• Don’t forget to inquire about the charitable tax deduction status of the recipient charity organization. In order for you to qualify for a deduction the charity you donate to must be an IRS-approved 501(c)(3) organization. A church, synagogue, temple or mosque will likely qualify; but check to make sure. You might also visit the Internal Revenue Service website and search for Publication 78 to find other non-profit organizations.
   
• Consider doing the delivery yourself. Often a worthy charity must pay someone to pick up your vehicle. If you drop-off your vehicle yourself, or pay the cost, you can help a charity maximize the benefit of receiving your car donation.
   
• Deliver the vehicle with care to eliminate all risk of running up parking tickets and other violations. Make sure you sign-over the title of your vehicle to the specific charity or organization and report the transfer to your state’s DMV (Department of Motor Vehicles) or appropriate licensing department. Whatever you do, do not leave the ownership signature space on the charity donation papers unsigned. Make sure all transfer and ownership paperwork designates your chosen charity or it may not qualify as a donation. This mistake could cost you your entire tax deduction.
   
• Your estimate of the vehicle donation value probably won’t cut it if your car or boat is worth more than $500. If this applies to your donation the IRS is going to want to see evidence of how much the charity got for it. Many charities will sell your donated car for cash. If this fits your situation, make sure the charity has a policy and procedure in place to provide you with a receipt that reveals exactly how much money the charity received from your car donation.
   
•  Make sure to generate and keep a thorough paper trail. If your car donation is worth more than $500, you should file IRS Form 8283 with your tax return. If a vehicle is worth more than $5,000, your documentation may have to include an outside appraisal. If you believe your vehicle is worth more than $5,000 you should determine the fair market value by having it appraised by a certified professional. IRS policy places the responsibility on you for determining your vehicle’s value.
• Car donation tax deductions require proof. A receipt from the charity and a copy of the title change is normally adequate for a donated vehicle worth less than $5,000.
   
•  If this is a higher value vehicle be sure to take the time to document your donation and help make sure the charity plans to obtain greatest monetary benefit. That way you will also get the biggest possible tax deduction.
   
•  Notify your insurance company of your car donation immediately to avoid paying unnecessary on-going insurance premiums.

You aren’t concerned about getting a tax deduction?

Want to do something charitable that will make you feel really good? There is always the option of giving your car directly to a needy person or family yourself. It takes very little effort to look on Craig’s List or your local community classifieds for someone in need of a car. This can be a very easy and fast way to donate a car. You get the added benefit of choosing the beneficiary. But the best benefit of all is that you will receive the gift of sharing their joy. Many a person would be overjoyed and so thankful to be so randomly chosen for car donation!

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