How to Donate a Car for Tax Credit

Donating a car to charity is a good thing. It helps the charity, and it lowers the amount of tax you owe. There have been recent changes in the tax law regarding the donation of vehicles. If you are looking to donate your car to charity, make sure that the agency to which you donate is legitimate. Keep very good records. Here is the information you need

Instructions

1

Get paperwork in order. Gather up the car's registration and title. This is very important, as a charity will not accept a car without the title. Find the keys to the car. Make photocopies of these documents, and put them in a file with other tax receipts. Find a reputable 501 (c) 3 charity. The donation must be made to a 501 (c) 3 corporation in order to be tax deductible.

2

Contact the charity, which will require you to sign the title over to it. Some states do not allow for blank titles to be transferred, so fill in the name of the transferee. Make sure the vehicle is free and clear of all liens. Charities cannot accept a vehicle with an outstanding or unsatisfied lien on it.

3

Make arrangements with the charity to pick up the car. Many will accept cars that are not running. Vans and trucks are in higher demand than cars. Speak with a representative at the charity to find out its particular regulations. Charities usually require that the keys and the notarized copy of the title be left in the car. Make sure you get a receipt for the donated car. In addition, a receipt should be sent by mail or electronically. The charity must sell the vehicle in order for you to claim the tax deduction. Taking the Blue Book value is not allowed. When the car is sold, the charity will send a receipt stating the amount of the sale. The receipt should include your name, the VIN of the vehicle and the amount for which it sold.

4

Put the receipt away in a tax file. It is an important document to save. The sale amount is the tax deduction amount. This donation must be reported on IRS Form 8283.

5

Determine when you can take the tax deduction. The tax deduction
can be taken on either the current year's or the next year's taxes. It
depends on when the car sells. Donating late in the year, October through
December, may result in the tax deduction's being postponed until the following
year.