How Can I Donate a Car to Charity?

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If you have an old car that you don’t plan to use any longer, one option for getting rid of it is to donate it to a charity. It’s a low-hassle way to help out people in need, while simultaneously receiving a deduction on your next tax statement. However, there are a few factors to consider before you give your care away. Here are some tips for ensuring the process goes smoothly.

1.    Go through a legitimate charity instead of a middleman. Many businesses offer to take care of the donation process for you, but beware. Often, they keep much of the proceeds for themselves, and only give the charitable organization a small percentage of the vehicle’s actual value. To make sure that you are giving your car to a verifiable charity, search for the organization online at Razoo or Charity Navigator to ensure that it is 501(c)(3)-verified. Habitat for Humanity and the National Kidney Foundation are two of the many nonprofit groups that directly accept car donations. Typically, even if the car isn’t drivable, the charity group will arrange for a pick-up.
2.    Work out a fair value for your car. You’re only allowed to deduct the amount of the fair market value for your car, which may not always be as much as the Kelly Blue Book value of the vehicle, depending on its condition. Get an estimate from a used car dealer to see what sort of price you could expect to receive and use that figure so that you don’t cause problems with the IRS.
3.    Take care of the technicalities. Make sure you receive a receipt from the charity stating the value of your gift, and claiming that you received no goods or services in exchange. You’ll need this statement to receive your tax deduction. You’ll also need to remove the license plates from the vehicle, and transfer the state title over to the charity. Check your state laws to learn more about the specifications for the transaction.