How to Donate Your Vehicle to Charity

When it comes to helping your community, making donations to charities is certainly a worthwhile and time-honored tradition. One of the most interesting ways you can help out charities is by donating your vehicle. If you have an older vehicle that is no longer useful to you and can be donated, the result will not only help out the charity, but you can also use the transaction as a tax deduction.

However, there are some speed bumps throughout the donation process, so you will want to be fully informed about what to expect before you donate your vehicle.

The Donation Process

Charities will either put the vehicle you donate to use or sell it to raise money. Be aware that if they sell the vehicle, then your tax deduction will be based on how much the vehicle goes for at the auction which may be far lower than its fair market value.

Value: If the vehicle you donate is worth more than $500, then you’ll need to fill out IRS Form 8283 Section A. This must be filled out with a written acknowledgement from the charity itself that stipulates whether the car was sold and for what price or if it is being used by the charity itself. If the value is $5,000 or more, you’ll need to have it appraised and you’ll need to fill out Section B of IRS form 8283.

Receipt: You will need to get an official receipt from the charity in order to verify your tax donation. This is important because this type of donation is one that often triggers an IRS audit, so you’ll want your tax records at the ready.

Remember that if the charity handles the entire transaction, you can drive the vehicle there yourself so that they do not have to pay towing charges.

How to Find the Right Charity

You should always check out charities that accept car donations and if it is eligible to accept tax deductible contributions as well. At that point, you can then do a little more research to see if they are the right ones for you.  

Transaction: If the charity handles the transaction of the sale itself, then it should keep virtually 100% of the sale. However, if there is an intermediary organization, then they can keep upwards of 50% or more which means that your donation may only be a fraction of the full market value of the vehicle itself.

Percentage of Proceeds: Arguably the most important question is how much of the proceeds from the sale or auction actually goes to the cause they are supporting. It should be a relatively high percentage otherwise most of the money will simply sink into the coffers of the charity itself.

Reputation: You should check out all charities to see if they follow all the rules and have earned a good reputation in terms of applying most, if not mostly all the money raised to their particular cause.

To find the best charity not only protects you, but it also ensures that the most amount of money raised by the auction or sale goes to the cause you wish to support. 


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