How to Donate Your Car

Getting rid of your old car isn’t always as easy as it seems. You might be able to trade it in and get some money back on your new car purchase. Maybe you can successfully resell it on your own. Either way, new cars depreciate precipitously, so it’s unlikely you’re going to get back a lot of money no matter how you unload your old vehicle. With that in mind, donating your car might prove to be the most rewarding option.

Donating your car has several benefits. First and foremost, you’re helping those in need. There are also financial and convenience advantages as well. Your donation will likely be tax-deductible and many charities will come pick up the vehicle, which is particularly helpful if it no longer runs.

Which charities accept car donations?

Many of the country’s major charities accept car donations, including Habitat for Humanity, Goodwill, Make-A-Wish, the Salvation Army and the Ronald McDonald House, to name a few. If you’re curious if a smaller and/or local non-profit accepts car donations, reach out and ask. This also includes technical high schools and colleges that look for vehicles to teach with. They may be willing and able to even if it’s not advertised.

Regardless of the organization, it’s always a good idea to research the charity you’re giving to. This ensures your donation is used to support your intended cause.

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What do charities do with the car?

Depending on the organization and the state of the car, charities will typically do one of two things with the donated vehicle. If it’s still running well, some may use it for their own operations or give it to a needy individual or family. Most often, however, charities will sell the cars at auction or for scrap and use the proceeds to fund their work.

Can you donate your car without a title?

It can still be possible to donate your car without a title, depending on the state where you live. If your state allows it, you will need to provide other paperwork that proves ownership. If you don’t have a title for your vehicle, contact your state’s DMV and/or the charitable organization to see if and how you can donate the car.

Can you claim a tax deduction from donating your car?

Charitable donations are only tax-deductible if they are made to non-profits that have received 501(c)(3) status from the IRS or meet 501(c)(3) requirements, such as religious organizations. You can use the Tax-Exempt Organization Search Tool on the IRS website to learn if a particular organization is eligible to receive tax-deductible donations.

How do you claim the deduction on your taxes?

First and foremost, you’ll have to itemize your deductions when filing taxes in order to receive the financial incentive for the car donation. If you claim the standard deduction, which most taxpayers do, you won’t receive a deduction for your donation.

For tax purposes, a donated car is only worth as much as the charity is able to sell it for. Even if you believe the vehicle has a higher value, your deduction is capped at the sale price.

Written Acknowledgment

A deduction claim of more than $250 but less than $500 requires written acknowledgment of the donation from the charity. This document must include the following:

• The name of the charity.
• A description (but not value) of your vehicle.
• And one of the following:
  • A statement that no goods or services were provided by the charity in return for the donation.
  • A description and good faith estimate of the value of goods or services, if any, that the charity provided in return for the donation.
  • A statement that goods or services provided by the charity consisted entirely of intangible religious benefits.

A deduction claim of more than $500 requires the written acknowledgment include the following:

• Your name and taxpayer identification number.
• The vehicle identification number (VIN).
• Date of donation.
• And one of the following:
  • A statement that no goods or services were provided by the charity in return for the donation.
  • A description and good faith estimate of the value of goods or services, if any, that the charity provided in return for the donation.
  • A statement that goods or services provided by the charity consisted entirely of intangible religious benefits.

If the charity is going to use the vehicle, the written acknowledgement should state so, and you can deduct the car’s fair market value. If the charity plans to sell the vehicle, the document must also include:

• A statement certifying that the vehicle was sold in an arm’s length transaction between unrelated parties.
• The date the vehicle was sold.
• The gross proceeds received from the sale.
• a statement that your deduction may not exceed the gross proceeds from the sale.

Tax Forms

You must obtain this written acknowledgment, which can be made through Form 1098-C, within 30 days of the vehicle’s sale or the date of the donation. If you are claiming a deduction between $500 and $5,000, you must also complete Section A of Form 8283. If the deduction is more than $5,000, Section B must be completed and include the signature of an authorized charity. You may need to include a written appraisal from a qualified car appraiser.

Have you ever donated your car? Tell us about it in the comments below!

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