Monday, April 10, 2017
Donating to a charity is a great way to get rid of a vehicle that you no longer want. Many charities accept used vehicles. You should call one up and ask, then schedule a time for a pickup. You may also qualify for a tax write-off, though the rules are somewhat complex. Depending on your car’s condition, you may need to have it appraised before you give it to the charity.
part 01 Donating the Vehicle
01 Find charities. You should identify a charity you’d like to give your vehicle to. Go online and check the charity’s website to see if it accepts vehicles. There may also be a phone number to call or a specific web page dedicated to explaining the donation process.
02 Check whether the charity is a qualifying nonprofit.
This is important if you want your contribution to be tax deductible. Generally, 501(c)3 charities and religious organizations qualify. You can double check by using the EO Select Check tool at https://www.irs.gov/charities-non-profits/exempt-organizations-select-check.
3 Provide information about the vehicle.
The charity will want to gather information from you about the vehicle. Have the following information handy when you call:
4 Complete required paperwork.
The paperwork you need will depend on your state. You should contact your state’s Department of Motor Vehicles and check. In most states, you will need the certificate of title to transfer the vehicle.
5 Have the vehicle appraised, if necessary.
You may need to have the vehicle appraised if you intend to claim more than $5,000 as a tax deduction. You should estimate the value of the car and talk to the charity ahead of time to find out what they intend to do with the car.
6 Schedule a pickup.
If your vehicle is accepted, you will schedule a pickup. Make sure that you are home so that you can handle any issues that might arise. Remember that the charity has up to three years to sell your vehicle.
7Sell the vehicle yourself.
You can also sell the vehicle and then donate the proceeds to the charity. You can also claim the proceeds as a tax write-off. Selling the car yourself would be an attractive option if you want to maximize the amount that you get for the vehicle.
8 Surrender your license plates.
Each state has its own process for transferring ownership of a vehicle. Generally, you can keep your plates and use them with your new car. However, if you want to surrender them, then you can drop them off at your state’s Department of Motor Vehicles.
part 2 Claiming a Tax Deduction
1 Identify vehicles that qualify for a tax deduction.
The IRS defines “vehicle” broadly. You can claim a tax deduction for a charitable donation of the following types of vehicles:
2 Calculate how much you can deduct. Take out your acknowledgement letter or Form 1098-C from the charity. Find out what the charity did with the vehicle. This will determine how much you can deduct from your taxes:
3 Find the vehicle’s fair market value. Fair market value is generally the amount the car would sell for in an arms-length transaction between strangers. You can determine this value by using a pricing guide, such as Kelley Blue Book or NADA.
4 Decide if you want to itemize your taxes. You must itemize your deductions to claim the tax deduction for donating a vehicle to charity. Instead of itemizing deductions, you could claim a standard deduction, which you get automatically. You should check whether you want to itemize at all.
5 Complete required paperwork. You will need to attach your acknowledgement letter to your tax returns if you claim more than $500. You will also need to complete certain forms: