If you have a car that is used infrequently, donating it to charity may be a viable option. However, there's much more to the process than driving it to the charity's local office and leaving the keys on the doorstep.
Although most charities have specific requirements for car donations, here are some general factors you should consider.
Check Its Condition
Fortunately, your car does not have to be in tip-top shape for you to donate it to charity. There are many charities that will take your used car regardless of its condition. Before you donate, ask the charity of your choice if there are any stipulations on the condition of the car.
If your car is intended to be driven by someone else, before donating, you should confirm it's in decent shape, both mechanically and cosmetically. Take the vehicle in for an oil change and ask the mechanic to perform a thorough inspection. If they find items that are relatively inexpensive to fix, it may be worthwhile to fork over the cash for the repairs.
Also, don't forget to give your car a bath and freshen up the interior to improve the overall appearance. You can do this at home without spending a fortune.
Prior to donating your car, you'll also want to get an idea of how much the car is worth. This figure will directly determine the amount of your tax deduction on your next federal return. To get started, visit one of the following websites:
Once you have entered the details on your specific vehicle, an estimated range of its FMW will appear. However, you should know the value of your donation will be based on the sales price if the vehicle is sold at an auction to help a charity raise funds, notes Edmunds.
Type of Vehicles You Can Donate
Charities that accept vehicles generally accept the following:
Trucks (includes crossovers or SUVs)
In some instances, you may be able to donate an oversized vessel, such as a boat or RV.
When preparing the car for donation, you should gather any pertinent documentation the charity and future owner may need. This includes:
Title and title transfer documents
Extended warranty documentation (if applicable)
CharityWatch also notes non-cash donations are a common trigger for an audit by the IRS. Therefore, make sure you document the value of the car for tax purposes and keep the records.
Method of Delivery
Vehicles in stellar condition can more than likely be driven to the charity's lot for donation. By contrast, you will need to have the car towed if it has major mechanical defects or is inoperable.
Is There an Ideal Time to Donate?
You can donate your car any time throughout the year. However, you want to be mindful of how long the process takes at the charity of your choice so you won't miss the December 31st cutoff for your upcoming tax return.
Be Aware of IRS Rules
Donating your car to charity is an excellent way to pay it forward while giving someone the gift of transportation. To ensure you receive a tax benefit for your donation, be sure to review the car donation rules from the Internal Revenue Service before moving forward. If you meet the criteria, you'll be well on your way to making a positive impact in the life of someone in need.
Finally, be sure the charity of your choice will donate the vehicle to someone in need or use it in daily operation so you can derive the greatest tax benefit.