1) Make sure it’s a worthy charity. Do your research. Make sure they take such donations. Also make sure that as much of your donation goes towards the cause as possible. We like using Charity Navigator and the Better Business Bureau
2) Deal directly to the charity. Middlemen can keep as much as 50 to 90 percent of the car’s value. Many of these for-profit middlemen companies advertise aggressively on billboards, magazines and TV. They might have a cute kid singing a cute song about helping out their cause to lure you in. Some of these companies may be for-profit organizations. 3) Do the math. If you still feel compelled to use a middlemen for-profit charity, at least ask how much of the car’s value will go to the cause. If it is just a flat fee of $50, you might not be eligible for any tax deduction from the IRS. 4) Check the recipient’s status. Are they an IRS approved 501 (c) (3) charity? They need to be if your car or donation is to qualify for a tax deduction. Most churches do qualify. Type in publication 78 into the IRS home page to make sure and to find other qualifying charities that will take your car. 5) Drop the car off yourself. Here’s a top tip. Take the car in yourself if it is running or you can afford the tow charge. The charity has to pay for this towing, so you will be guaranteeing the max benefit to your chosen cause. 6) Do the transfer yourself. I see this all the time, you assume the transfer will be done properly and 6 months later you receive a parking ticket or other violation in the mail. Eliminate this risk by transferring the car yourself directly to the charity. Re-title the car and contact the DMV. 7) Don’t guess at your write off. A car or boat worth over $500 will need the proper paperwork of what the charity sold it for. ( Most charities take your car and immediately flip it for cash) Reputable charities will happily supply you with this information. 8) Fair market value. If the charity keeps the vehicle and uses it for its own charitable work or if your car or boat is worth less than $500 then you can use the Kelly Blue Book to report the amount of the deduction. 9) Keep all records. Get IRS form 8283 if your car is worth more than $500. If it’s worth more than $5,000 you must include an appraisal from a reputable company also as well as the receipt from the charity. 10) Rinse repeat. After completing one donation, keep all your details together so the next one will be easy. Remember, large tax deductions such as a car get scrutinized by the IRS so be very detailed oriented. Follow our 10 tips above and you will feel good about helping your worthy cause without dealing with any frustrations from the IRS.
