I recently had the fun of trying to figure out how to donate an old car in California. I wanted to make sure that my donation truly went to a good cause while making sure I could write off the true value of the car. So the first thing I did was try to find my used car retail / market value. There are so many sites that can tell you the market value for used cars (Kbb bluebook, Edmunds, nada, etc…). The next thing I did was figure out how I would get a donation tax receipt that would appease my tax guy. This turned out to be simple because most of the car donation places will give that to your straight away. Read on for details.
1. Don’t use a middleman. Why does this matter? Sadly enough there are plenty of intermediary organizations who want to help you with your car donation. Sounds good right? It isn’t. In my opinion, just about anyone can figure out how to properly donate an old car without these middlemen, and save a bundle in the process. These donation brokers (made that name up) want to take 50 to 90 percent of the vehicles value for their own tax donation reasons. In other words, check directly with your favorite charities directly.
2. Choose a charity that you like. This is an easy one… why not donate your car to a charitable organization that you actually like. Makes sense right? If you don’t have a favorite organization that takes vehicle donations you can do a bit of research at CharityNavigator.org.
3. Know what your car is worth. This is an important one because you need to know the value of your donation for your tax receipts. Again, it is pretty easy to find the value of your used car at Kbb bluebook, Edmunds, nada, etc… Wherever you donate your car should be able to tell what amount is available to you as a tax deduction.
4. Choose an IRS approved charity. If you have gone this far in your quest to donate your used car, you want to make sure that you will qualify for a deduction. Go to the IRS website and search for publication 78 for a list of qualifying non-profit organizations.
5. Report the transfer to DMV. After the vehicle is gone… you want to make sure you don’t have any liability for licensing fee’s or parking tickets. Every state handles vehicle transfers differently… your DMV office should be able to help you file the transfer paperwork.
6. Get a receipt from the charity. If you simply tell the IRS what you “feel” your used donation vehicle was worth they will most likely disagree with you. You want to have the charity give you a receipt for the vehicle you donated… this is standard practice… but make sure and get it from them. This will make your car donation tax deduction much smoother. If your car is worth more $500 you will need to attach an IRS form 8283 with your tax return. If it is worth more than $5,000 you will also need an outside appraisal.