30 Things and Tips You Need to Know Before Donating Your Car

Below are tips for people interested in donating their cars to charities.   Before donating your car, it is important to know some common pitfalls. Taking time out to do a little homework will help you make sure that your donation makes the most impact. The key is carefully selecting a charity of your choice with a past history of positive performance, while doing all you can to lessen your risk of being audited and other unpleasant experiences.

1. Don't rush into a decision It's always best to consider your options before accepting the first chance to donate your vehicle to a charitable organization.

2. Look local Have you checked if a regular charity you support has a vehicle donation program? You may want to look there first before seeking a specialized charity for this purpose.

3. Know common pitfalls Oftentimes, donors mistakenly think that the recipient of their car donation will receive the biggest payoff from their donation. Sadly, this is just not the case. Rather, it's the donor that benefits most from this process most often. Being aware of this will help you to ask questions that lead to the most favorable outcome of your efforts.  

4. Beware of middlemen Intermediary organization typically sell away donated vehicles in bulk and then to give a portion of the proceeds to a charity. In such situations, it is not unheard of for charities to receive a mere $50 per car in the car donation process.

5. Stay away from for-profits, when possible They commonly serve as middlemen. This may take a little more work, since the for-profits use advertising aggressively to solicit car donations. But, by taking time out to identify a charity that manages the car donation process directly, you can help make sure that the charity itself reaps the maximum rewards of your car donation.

6. Make sure everything adds up If you feel absolutely certain that using a third party (middleman) organization is for you -- one that will sell your donated vehicle and share some of the proceeds with a charity organization -- ask a representative how much of your donation will actually be sent to the charity. Whether your donation is tax deductible will depend on the response. Tax breaks are generally not available from intermediary organizations that give flat monthly fees or fix amounts of money per car to charities.

7. Look for direct donation opportunities Charities that put car donations to use by taking measures use donated cars for transportation needs of car recipients are ideal. Look for a charity with a history of positive performance in this way by checking its track record on websites like the Better Business Bureau.

8. Make sure your "non-profit" charity is a 501 (c)(3) Is a charity claiming non-profit status? Don't take its word for it. Find out for sure, and be sure to confirm that the organization's status is a 501 (c) (3) organization with public charity status. You can do so by requesting a copy of the charity's Letter of Determination from the Internal Revenue Service for your own files confirming its tax exempt status.

9. Speak in person Talk directly with the representatives of the organization you wish to receive your car donation, in person when possible (face-to-face is always the best way to go).

10. Ask what your responsibilities are as a donor to the charity.   

11. Have your car title on hand, clear any lienholders Make sure you have your certificate of title available (with your name on it.) And make sure there aren't any lienholders.

12. Don't rule out your vehicle for donation too early because of a failed emissions test Many donation programs accept cars that haven't passed smog tests. Even cars without keys can be accepted in some cases, so long as they can be towed.

13. Drive the car to the charity (if it runs) If you've chosen a good charity, you'll want to make sure that it benefits as much as possible from your donation. Car donations that requiring a pick-up or tow are an added expense to the charity that could be put to better use.

14. Be present at pick up If you can't drive your car tothe charity organization, do you best to be present when it's picked up, along with all related paperwork.

15. It shouldn't cost you anything to donate your vehicle Should your car need to be towed or otherwise prepared, in most cases all costs should be covered by the donation program.

16. Transfer the car title correctly to the charity Make sure to formally sign your donated car over to the charity organization you have chosen. If the charity requests you not to indicate clearly the assignment of ownership of the car, beware. Find another charity. Also take note that if you continue to officially own the car, you will be held responsible for any and all illegal activity that happens using the car - including parking tickets, and worse.

17. Cancel your car insurance Just like the case of selling your car to a person or dealership, you'll no longer need insurance coverage once the title is transferred. You may even be refunded by your insurance company - an added bonus.  

18. Take pictures Taking pictures of your donated car will help you confirm its true value. It also helps to keep a record of your receipts for improvements to your car.

19. Take note of the representative who receives your car donation Upon receiving your donation, make sure a representative of the charity records your personal information, as well as details about your car, including its year, make, model, VIN, mileage, license plate number, title number, etc.

20. Learn the immediate next steps Find out the immediate next steps that will happen to your car after you donate it - whether it will be sold, or directly contributed to a beneficiary.

21. Take off your license plates Many people forget this step. Before donating your car, remove your plates and return them yourself to your local DMV.

22. Ask for privacy Unless you would like your information on lists to that the charity sells or shares your information with.

23. Keep a paper trail The IRS loves to audit individuals who perform non-cash donations (like car donations). So keep a clean, and complete paper trail of important documents related to your car donation.

24. Be sure to get a receipt for your car donation For the same reasons shared above. It could seem like a headache to keep receipts related to your vehicle donation. But it will pay off when tax time rolls around. Especially if your donation is worth more than $500 and the organization who received your vehicle sold it, the IRS will require you provide them proof in the form of a written receipt of how much the organization received for the sale.

25. When considering a tax deduction, know when to use Fair Market Value (FMV) for the car Fair Market Value (FMV) of your car based on listings from Kelley Blue Book can be used to determine the worth of your car in lieu of evidence of the sale price when the charity keeps and uses the car instead of selling it, or it is worth under $500. If not, the sale price of the car by the charity at an auction shown on the receipt from the charity is the only amount you can deduct.

26. File the right forms If your vehicle is worth over $500, you are required by the IRS to attach IRS Form 8283 to your tax return. For cars worth more than $5,000, tax documents must include an external appraisal, in addition to proof the donation took place in the form of a receipt from the charity organization, evidence of the title was changed, etc.

27. Don't give out your SSN too soon You should only be asked for your SSN if your car donation is worth more than $500. If so, your SSN could be needed to complete and properly file Form 1098-C with the IRS.

28. Ask advice from a tax professional Speak together with an experienced tax professional if you're confused or have questions about the tax deduction process of your car donation.

29. Consider doing it yourself Experts say that selling your vehicle yourself and donating the money to charity maximizes the amount of money that actually goes to the charity. Consider that option if you don't have the time to go through all the steps above.

30. Encourage a friend Job well done! Whether you've donated out of the goodness of your heart for the benefit of others, for tax reasons, or both, your success story can be a great incentive to others considering a car donation. So pass it on.