The car donation process is simple. All you need to do is call the charity and someone will come and pick up your vehicle, or tell you where to bring it. However, with so many charities to choose from and so many people trying to scam the innocent, picking the right organization is not always easy.
On this page you'll find some general tips you can use when you are trying to decide where and how to donate your vehicle.
First Steps to Take When Donating a Car
Before you donate your car to charity, the IRS advises that you:
- Research the charity or organization you plan to donate to.
- See if you will receive a tax benefit for your donation. (The charity/organization you donate to must be qualified. 501(c)(3) organizations are common types that make you eligible for a tax deduction.)
- Look up the value of your car (however, you can only deduct the actual amount the charity sells your car for).
- Ask if you, as a donor, have any other responsibilities in the process.
In addition, you may want to consider:
- How your car will be used and where it will go.
- If the money from the sale of your car will be used locally or outside of your community.
- Which programs or services within the charity will receive funding from the sale.
- What the efficiency rating of the charity is. (A lower rating means more of your donation goes toward administrative costs, not to the programs and services you want to support.)
For more information on this and tax-related matters, read the IRS's A Donor's Guide to Vehicle Donations.
Finding a Charity
The choice is yours, but before donating your car, confirm that your charity of choice is recognized by the IRS. Otherwise,
your deduction will be rejected. If in doubt, check the IRS's Cumulative List of Organizations which lists qualified charities. Religious organizations aren't listed, though they do qualify. You can also contact the Better Business Bureau (BBB) in your area or the BBB Wise Giving Alliance.
If you're still undecided, Forbes ranks America's 200 largest charities and, in some cases, discloses their financial details. Keep in mind, however, that not every charity listed here accepts car donations.
The IRS has clamped down on how much you can write off on donated cars. No longer can you submit a vehicle's full value or "blue book" value for your tax deduction. Now, instead, you can only claim the amount for which it is sold or the fair market value.
Motor Vehicle Department Donation Procedures
Just as if you were selling your car as a private party, when you donate your car to charity, you'll need to satisfy some requirements with your state's motor vehicle division. Some common processes you'll likely need to complete include:
- Completing a title transfer.
- Canceling your registration.
- Completing a notice of transfer/release of liability form.
The exact steps you'll need to take will vary from state to state. Check with your state's DMV office for specific requirements and details.
NOTE: In addition to DMV requirements, you'll also need to cancel your car insurance policy.
Notice of Transfer/Release of Liability
Be sure to visit our guide about Title Transfers to learn how to transfer the title over. You may also need to complete a notice of transfer or release of liability form.
Canceling Your License Plates and Registration
The laws for this vary by state. Some states require surrendering the vehicle's license plates to the DMV. Others require submitting a sold notice, and there are a few states that require no formal notification at all.Source: www.dmv.org