We listen to a lot of NPR (WAMU ) and every so often we’ll hear a pitch to donate our “used vehicle, RV, boat or airplane.” We considered donating our private jet, seeing as how they’ve fallen out of favor ever since the auto company CEOs used theirs to a Congressional hearing, but just haven’t pulled the trigger yet.
One thing we have done, though this predates our appreciation of NPR by several years, is donate a used car to a charity. About seven years ago, my wife’s car died (blown head gasket) and it didn’t make financial sense to repair it. We were looking around at our options and decided that donating it to a local school was the best option for us (I mentioned the car in passing in my post on why you should donate your car ).
So how do you donate your car? It’s a simple three step process.
Identify the Charity
Charities that accept vehicle donations will often have plenty of information how the process works. For example, here is WAMU’s vehicle donation FAQ  which answers almost every question you could possibly have. If the charity you wish to support doesn’t have as comprehensive a FAQ as this one, use these questions as a guide and ask them.
Here are the crucial answers you need:
- Will you accept my car? Some charities will only accept cars in working condition, those that pass inspection, etc. When you call, chances are they will go over all this with you anyway so you won’t need to ask. They aren’t going to send a person out to pick it up if they aren’t going to accept the car when it arrives.
- What paperwork will they need? Usually, just a free and clear title (no leins).
- When will a receipt be issued? You’ll want one when they take the car so you have proof that someone took it in the first place. Next, you should get a letter that includes an IRS Form 1098-C  (Contributions of Motor Vehicles, Boats, and Airplanes) that lists your deduction amount.
- How will the car’s value be determined? The charity will probably sell your car and the amount they get is what is listed on the Form 1098-C. In the event they keep it for their own use, then the blue book value may be used.
When you do select a charity, make sure the donation is going directly to them, not through a third party that might take a commission. Also confirm that the Charity is an IRS registered 501(c)3 nonprofit organization.
Making the Donation
This is the easiest part since the charity handles most of the work for you. Once you’re ready, give them a call and schedule a time for them to pick up the vehicle. Make sure you have a signed clear title to give to the person making the pick up, you remember to give them all the keys, and clean everything out of the car. The last thing you want to do is leave your EZ Pass in the dash. 🙂
Claiming the Deduction
This final step is straightforward as well. To get a tax deduction, you will need to itemize your deductions (you can’t claim the standard deduction) and simply claim the donation. Your proof will be the receipt and IRS form that the charity will send you once they decide what they will do with the car. See how easy that is?
Donating a car is remarkably easy and even easier now that the onus is on the charity to provide the documentation. In year’s past you would have to get appraisals and make all sorts of claims that the IRS could dispute. Now, it’s a simple form and you’re done. You might have to claim less for your car, which is why the IRS went in this direction, but this takes the uncertainty out of the process.
Have you ever donated a car? Is it this simple? Or are there hidden gotchas I missed?
(Photo: orinrobertjohn )