How to Donate a Car
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Now more than ever, cash-strapped non-profits need financial support, and donating your car can be a great way to help. It’s also very generous.
It’s also important to remember that you can only take a charitable deduction if you itemize your deductions. So, before you give away your car, just make sure you’ve done the math and it makes sense for both you and the non-profit.
Pick a Charity
It’s very easy to give money or an in-kind donation to a non-profit. The hard part is making sure the non-profit deserves your gift and that you are confident the organization is spending its resources wisely.
The first step is to identify a charity that engages in work that is meaningful to you. For some, that will be helping to feed poor children; for others it will be the local animal shelter, and for others still it will be their religious institution.
There are thousands of non-profits to choose from. The most important thing to verify is that donating a car is possible with the charity. Most of the time that means it must be registered with the IRS as a 501(c)(3) nonprofit.
Ensure You Can Donate Your Car
Once you’ve identified a couple non-profits in the area you’d like to support, find out if they accept car donations. Not all non-profits are equipped to handle that type of donation.
If they do accept cars as gifts, you can then narrow down the list. You can do this by checking each organization’s Charity Navigator rating. You can also look up their tax filings on Guidestar, where you can see their financial profile and how much their highest paid employees are compensated.
Additionally, another great way to research a charity is by visiting the non-profit to form your own opinion of the work they do.
Tax Deductions for Donated Cars
The deduction you can take on your tax return will only be based on the fair market value of the car if the charity does one or more of the following:
- Uses donated cars in a way that’s significantly beneficial to the community (e.g. Meals on Wheels).
- Makes major repairs to the vehicle, thus increasing the value of the car.
- Sells or donates the car to a person in need at a below-market price.
Check out Kelley Blue Book or the NADA Guides to determine what the fair market value on your car might be. However, keep in mind that these book values are generalizations.
For example, if you determine that your car is worth $5,000, but you know it doesn’t start because it needs a new battery, the fair market value is $5,000 minus the price of replacing the battery.
You can learn more about taxes and car donations by visiting our Tax Deductions Car Donations page.
DMV Requirements for Donations
From the perspective of the DMV, donating your car is similar to selling your car. All the paperwork for a title transfer plus canceling your registration still applies. The exact steps you’ll need to take will vary from state to state. Contact your local DMV office for specific requirements and details.