What You Need to Know About Donating Your Used Car to Charity

Thinking about donating your used car to charity? Maybe you already have a charity in mind. You'll want to do your homework before signing on the dotted line. But once you have all the facts and are ready to make your donation, you'll be doing a wonderful thing for a worthy cause.

Check Out the Charity Before Donating Your Used Car to Charity

Your first order of business is to identify your charity of choice. Once you've done so, you'll need to confirm the charity's 501(c)(3) status. This means that they are a recognized charitable, educational or religious not-for-profit organization.

Confirm Your Tax Benefit Before Donating Your Used Car to Charity

To take advantage of the tax benefit of donating your car to charity, you'll need to use an itemized form come tax time. Ask your tax preparer for Schedule A/Form 1040. If you're uncertain about this form, visit www.irs.gov for more details or call 800-829-3676.

Confirm the Value of Your Used Car

It's important to note that there are limitations to how much you can deduct on your taxes for this type of charitable contribution. Your car donation cannot exceed 50% of your adjusted gross income. Be sure you know the value of the car you're donating. And the IRS isn't interested in the "blue book" value. They want to know what the fair market value is, which is often substantially less than Kelly Blue Book values. It's crucial to know this before making your donation so ask around or go online and see what comparable car prices are.

Get it in Writing Berfore Donating Your Used Car to Charity

As a charitable donor, the IRS requires solid proof of your donation when making your used car donation. You MUST acquire the following BEFORE filing your tax return:

• If the car is worth more than $250, you'll need written (on letterhead or via email) acknowledgement from the charity. The acknowledgement must include the charity's name, a description of the vehicle and one of the following: A statement that no goods or services were provided by the charity in return for the contribution; a description and good faith estimate of the value of goods and services, if any, that the charity provided in return for the contribution; or a statement that goods or services that the charity provided in return for the contribution consisted entirely of intangible benefits, if that was the case.
  
  
• If your vehicle is valued at more than $500, you will also need to complete Section A of Form 8283.
  
  
• If your vehicle is valued at more than $5,000, will need to get a written appraisal by a qualified appraiser within 60 days prior to the date you want to donate your car. In this instance, you must also complete Section B of Form 8283.

When you donate a used car to charity, you will also be expected to transfer the title from your name to the charity's name, update the car's registration through the DMV and remove the license plates. Once you have done so, you're ready to donate your car to a very worthy cause. And not only are you getting a great tax break, but you're giving the charity a great gift that they'll appreciate.