Donating Your Old Car Helps Others in Style
Donating your car is a great way to make room in the garage for your new car. The benefits range from a tax break the next time you file to helping your favorite charity—or even getting the old junker that doesn’t run out of the way. No matter the car you’re planning to donate, there’s a charity willing to take it. Here’s all you need to know about donating a car, from the paperwork to how much you can deduct to spotting a scam.
The first thing you should do when donating your car is look over A Donor’s Guide to Vehicle Donation published by the IRS. Here’s a quick reference for what you’ll need depending on the value of the car you donate:
- If the car is worth less than $250, you’ll need records of the name and address of the charity; the date and location you donated the vehicle (where they picked it up); and a description of the vehicle.
- A vehicle between $250 and $500 needs the same, plus a written acknowledgment of the donation from the charity. A donation under $500 does not need any documentation filed with the IRS but keep records in case you’re audited.
- Between $500 and $5,000 in value is when your donation becomes a little more complicated. Above $500 and you need to submit a copy of the acknowledgement and Form 8283 Section A with your return. It will be the first thing that pops up if you search for it on the internet.
- Any vehicle over $5,000 needs all the above. Instead of Section A of Form 8283, you will fill out Section B. You’ll also need to include an appraisal of the vehicle. This will require some money up front—usually a few hundred dollars—but hiring a professional will be well worth it in the long run.
Car values and how to donate
$0–$500 vehicles — First off, on your end, you need to find a registered 501(c)(3) charity that will take the car. There are plenty out there that will take anything that even resembles a car—and pick it up for free! These places tend to run used car lots and use the proceeds to fund their charitable efforts. Your tax deduction will be the amount they get from the sale. The benefit is your car is gone hours or days after you call. The downside is you won’t know how much you can deduct for a few weeks or months. If it’s close to the time to file taxes, you might need to apply for an extension or file an amendment to your return.
$500–$5,000 vehicles — If you have a car that’s in decent shape and runs great, particularly a truck or a van, you might look for a charity that needs a vehicle for their own use. A lot of organizations need to pick up the people they serve—food banks especially need trucks and vans to pick up donations from around town. If you go this route, you can deduct the fair market price of the vehicle on your tax return, and you can do it as soon as all the paperwork is in place.
$5,000 & up vehicles — If you have a car that you know has value or collectible status, you can look for an organization that might want to raffle it off. Or work with a charity you already know of and help them start a raffle. This is the price range you need an appraisal for, but once you sign the title over to the charity, you can start working on your taxes. Sure you could get more than the appraised value out of a private sale, but the amount that a car raffle can bring in is even greater still.
Beware of scams
It is far less common now since the IRS overhauled the regulations on non-monetary donations, but scams still occur. The most common scam is a fake charity—this can be found out with a quick search of Charitynavigator.com. If an organization is promising you gifts or vacations for your donation, start asking a lot of questions—if they can afford to give away an expensive gift for every donation, they don’t need yours.
It’s all about helping
Whatever the value of your car and however you decide to donate it, the main thing is helping others. Maybe it was your first car from when you just got your license and it’s no longer running, but it can still help someone. Or perhaps you inherited your grandfather’s classic Packard and know its sale could make a huge difference for a worthy cause. There’s an option for everyone when it comes to donating your vehicle.