Donating a Car to Charity and Getting Tax Benefits

Donating a Car to Charity and Getting Tax Benefits

How many times have you sat in your driveway, staring at your car and thinking What am I going to do with this thing? If you’re like most Americans, that number is probably close to zero. After all, most of us can’t even imagine life without our cars or the freedom they offer. But what happens when your trusty ride finally dies? You can sell it, but depending on its age and condition, you may not get much for it at all. You could donate it to charity, but where’s the tax benefit in that?

1. Find out if you qualify

Before you go giving your old car away, be sure that you qualify for a tax deduction. If you give away more than $500 worth of donations in one year, expect to receive Form 1098-C from your charity of choice. This form will list all of your donations over $250 each. The IRS requires any donation valued at more than $500 to have documentation. So if you donate multiple items (or an item valued at more than $5,000), you’ll need multiple forms—and probably some additional paperwork from your charity as well. The IRS doesn’t require charities to provide these forms until February 15th of the following year so don’t wait until then! You can request them sooner so that they arrive before December 31st when filing taxes is due.

2. Call and Schedule Your Pickup

Once you’ve found a car donation center that accepts cars, pick up the phone and call them. Don’t be afraid to haggle—in fact, expect it. Most car donation centers have fixed fees they charge donors but if you ask, you might be able to get your fee reduced or waived entirely.

3. Get ready to donate your vehicle

To make sure your donation is eligible for tax deductions, it’s important that you register your vehicle with Donate a Car Today. Let them know you’re trying to donate your car to charity so they can confirm that your donation meets IRS requirements. They’ll ensure that all of your information is up-to-date and find out whether or not you can take a deduction on your taxes.

4. Take photos before you donate your vehicle

In order to claim your deduction, you’ll need to prove that you donated your vehicle. Before giving away your car, take photos of it from all angles: inside and out. If possible, get a photo of its title or license plate.

5. Receiving tax benefits

You can write off all of your sales tax from your recent car purchase. Your receipt should show both total sales price as well as taxable items like any fees (registration, title, and so on). You can also write off fees for getting your car ready for donation with groups like Goodwill or The Salvation Army. Plus, if you’re donating an old car that’s in fair condition or better, you can deduct $500 of its fair market value up front.