The ABCs of Car Donation - O is for Opportunity

When you donate your car to charity, it opens the door to a lot of valuable opportunities. You get the opportunity to divest yourself of a car you do not need and you get to do it in the most opportune way.

There are only a very few requirements for donating a car to charity. You just need a valid title, your car has to be intact and it has to be in place where the tow truck can easily get to it. And, your car will be picked up at no charge to you. There is no muss, no fuss involved. There are no car repairs required, no negotiations with a car dealer or a private party, no wasting time or money advertising or showing the car. Car donation only requires a very few minutes on the phone or on the internet.

Car donation offers you the opportunity to get a very nice tax deduction. Your tax deduction is equal to the amount the charity sells your donated car for or $500, whichever is more. All that is required of you to claim your tax deduction is to simply itemize on your federal tax return. The charity you donate your car to will provide you with all the paperwork you will need to claim your valuable tax deduction.

When you donate your car to charity, you have the opportunity to assist a charity whose mission you believe in. The money generated by the sale of your car donation can support International charities that are helping to promote human rights, animal rights, environmental issues or who provide food, shelter, medicine, health care, education, etc. to third world countries or to countries who have been struck by a natural disaster. Through your car donation, you have the opportunity to support National, regional or local charities that are striving to cure disease, illness and injury, or to provide services and education for those currently suffering and their families. You also have the opportunity to help charities that provide food, shelter, health care, counseling, etc. to the homeless, poor or those who are suffering from mental illness or substance abuse. You have the unique opportunity to help charities that provide assistance to victims of child abuse, sexual abuse,  abuse against women, animal abuse, or who provide education, training or other programs for young people, the disabled, the unemployed or the under employed or to charities who provide services to the elderly and/or their families. You can also help support charities who assist veterans, active duty members of the military or their families. The proceeds from your car donation will also afford you the opportunity to support various religious organizations or ministries. Or, you can help charities that support the arts, music, libraries, etc.

If you have a car you no longer need, you have a chance to help yourself and to make a difference in the life of someone else. All you have to do is seize the unique opportunity and donate car to charity.

The ABCs of Car Donation - N is for Need

When you donate your car to charity you do not just satisfy your needs. You also satisfy the needs of the charity you donate car to and those of the community.

Car donation satisfies your needs in many ways. First, you get rid of a used car you no longer need. You also save yourself the aggravation of haggling over the trade in value of your car with a car dealer. No one needs that! You will not need to pay for advertising your vehicle for sale privately. And you will not need to waste your valuable time waiting for people to call or come to look at your car or negotiate the sale price for the car. It is very difficult to sell a vehicle that has a major problem and/or does not run.

When you donate car to charity, you will not need to fix it. Most car donation charities will gladly take it no matter what condition it is in. And the charity will have your car picked up fast and free, thus satisfying your need to get rid of it to make room for your new or newer car. You will also get a valuable tax deduction for your car donation. Who does not need that?

Most charities sell donated cars. Newer cars or cars that run are generally sold through public or dealer only auctions. This helps to supply the market with much needed used cars. Older cars, cars that do not run, are significantly damaged or rusted are usually sold directly to parts yards. There, the valuable parts are removed from the cars and the remainder is crushed. This not only helps to provide needed used car parts to the market, it also is a needed source or scrap metal, most of which is sold overseas for construction.

Charities rely on car donations for some much needed revenue. When you donate your car, there is an extremely wide variety of needs it can help to fill. With your car donation, you can provide food, water and shelter to needy people in third world countries or in your own community. It can go to help fund needed research for many diseases, illnesses or causes. It can be used to help fund educational programs or other programs to help young people. The proceeds from your car donation can help fulfill the needs of those currently suffering with physical or emotional problems, or those that have been abused or abandoned. Or, it can provide services for veterans, soldiers and/or their families. Your car donation can help animals either worldwide or in your own area.

There is a lot of need in our world, especially now because of the state of the economy throughout the world. The used car you do not need any longer will be used to help fill some of that need and also fill some of your needs. To do that, you simply have to donate your car to a charity that fills a need you believe in.

The ABCs of Car Donation – M is for Money

When you donate your car to charity, you will save a lot of money. First, you will save money at the car dealership. Most auto buying guides say you will be able to negotiate a much better price for a new or used car without a trade in.

Through car donation, you will save the money you would have paid to advertise the sale of your car either on the internet or through the newspaper. Also, if your car does not run, has a major mechanical problem or a lot of body damage, you may have to fix it in order to sell it for a decent price. Donating your car will save you the money you would have paid in repair costs. Also, you will not lose any money by having to take time off from work to show the car, fix it, etc. And, if your car is in really bad shape, you will not have to pay money to have a junk yard come and tow it away.

Most car donation charities will be quite happy to accept your car no matter what condition it is in. You will simply need to give them a valid title. When you donate your car to charity, they will pick up your car fast and free and at a time that is convenient for you. That will save you money on the unused part of your car insurance, registration, license plates, etc.

You will be eligible for a tax deduction of at least $500 when you donate car to charity. To claim your money saving tax deduction, you just need to itemize on your federal income tax return. In most cases, the charity you donate your car to will sell it. If they are able to sell it for more than $500, that sale price will become the amount you can claim as your tax deduction. Unlike many things in life, getting a tax deduction by donating a car to charity is not a gamble it is a sure thing.

The charity you choose to donate car to will use the money generated from its sale to help further their mission. They may use it to help fund research on a wide variety of illnesses or diseases. They may use it to provide information and services to those inflicted with aliments, or with mental illness. The proceeds might be used to provide counseling services, for education or for programs for young people. The money may even go to help fund services for wounded soldiers, veterans or their families. Some charities use the proceeds from the sale of car donations to help provide shelter, food and medical services to needy individuals or homeless animals.

When you donate car to charity, you save money in many ways and the charity is able to use the money generated from its sale in many ways too.  Car donation is a very good thing for your bottom line and for that of the charity as well.

The ABCs of Car Donation – L is for Learn

Learn everything you can about the entire car donation process and its benefits to you. First, learn whether you can claim the tax deduction  you will receive for donating your car to charity.  You can only claim the tax deduction if you itemize on your federal income tax return. 

If you regularly itemize on your taxes, you will get a financial benefit if you donate your car. If you do not normally itemize, you should learn whether you will be able to if you donate car. A simple way to learn whether it will make a difference is to re-calculate your previous years’ taxes as if you donated a car. If car donation would have allowed you to itemize on your taxes last year, it probably will this year as long as there are no other major changes in your financial situation.

Next, learn what charities will let you donate your car based on its condition.  Many charities will only accept vehicles that are under ten years old, run and have no significant problems, rust or body damage. If your car does not fall into this category, you only have to do a little research to learn what charities will accept it.

Once you compile a list of charities, learn all you can about them. One of the first things you will want to learn is whether the charity is an IRS qualified organization. If you donate car to an unqualified organization, you will not be able to claim your tax deduction. In general, qualified organizations are 501 (c) (3) organizations. To learn more, see IRS Publication 78. Other things you will want to learn about the charity is their reputation in general, any complaints that have been filed against them, the portion of proceeds from car donations that go toward charitable purposes, etc.

Next, you will want to learn about the entire car donation process. Learn where and how to sign over the title to your car. You are the seller and will need to sign the title in the space marked “seller’s signature”. You need to sign your name as it appears on the title. If there is a lien listed on the title, you need to learn whether a lien release is necessary.

Once you sign the title, you need to learn what to do with it. Some charities ask you to leave it in the car. This is never a good idea. Some will ask you to give the title to the towing service when they pick up the car. Still some charities will ask you to mail the title to them. They ask that because it is safer for you to have it in their hands rather than those of the towing service.

You also need to learn what to do with your license plates. Most states require you to remove them.

Finally, learn what type of documentation you will receive from the charity. If your car is sold for more than $500 the IRS requires the charity to provide you with IRS Form 1098-c.

The more you learn about car donation the smoother the process will be for both you and the charity you donate car to.

The ABCs of Car Donation – K is for Knowledge

Knowledge is power even when it comes to car donation. The more knowledge you have about the car donation process, the better decision you will make about whether to donate your car and what charity to donate car to.

The answer to the question of whether to donate your car is determined by your motivation for donating it. If your motivation is simply to help the charity, the answer is of course; donate car.

If your motivation is get a tax deduction you will need to gain some knowledge about what the tax deduction is and if will you be able to claim it. To claim the tax deduction, you will need to itemize on your Federal tax return. That means you will have to file Schedule A. Your actual benefit from your car donation is determined by the tax bracket you are in. For example, if you are in the 35% tax bracket, your actual benefit is 35% of the amount you claim for your car donation.

There are several things that will determine which charity you donate car to. One of them is the mission of the charity. There are a very wide variety of charities that accept vehicle donations. They include international and national charities as well as state, regional and local ones. Their missions range from conducting research on many diseases and afflictions, to helping those who are afflicted, to animal rights issues, to environmental issues, to programs for young people, to care for the elderly, disabled, injured or abused, to local food banks, homeless shelters, hospices, etc.

Once you determine the mission you wish to support, you will want to obtain some knowledge of their efficiency, effectiveness, reputation, etc. There are a number of ways to can check them out. Some of the places you can check are Charity Navigators, the Institute of Philanthropy, GuideStar, etc. If the charity you are checking on does not have a good rating, those guides will show you alternative ones.

Once you have narrowed down you choices, you will need to gain some knowledge about their car donation process. One thing you will want to know is whether they handle donations themselves or use the services of a car donation center. Many use a car donation center. One reason they do is because the vast majority of donated cars are sold. There is a certain level of expertise required in operating a car donation program. It requires the knowledge of the rules and regulations involved in the sale of vehicles, the transfer of titles, what to do with the license plates, etc. These rules and regulations vary by state. Many charities prefer not to use their resources for this and often find it to be more cost effective to use a car donation center.

Next, you will want to gain some knowledge regarding the qualifications the charity has for accepting a vehicle. Many prefer to only accept those cars that run and are less than ten years old. Other charities accept vehicles in virtually any condition as long as they have not been stripped of their parts and are in a location from where they can be towed.

The more knowledge you have regarding the intricacies of car donations, the more you will know whether and where to donate your car.

The ABCs of Car Donation – J is for Joyful

Car donation is a very joyful thing when it is done correctly. To make it a joyful experience, you simply need to follow the instructions given to you by the car donation charity. Those instructions are designed to make the entire process joyful for both you and the charity.

They will include the details on where and how to sign over the title as well as what to do with the license plates for the vehicle. The instructions will vary by the State the car is located in and where the car is parked. For example, if your car is parked on the street you may need to be there when the tow truck arrives. If you car is parked in a driveway, you may not need to be present as long as you let the towing service know where the car keys are.  Following these instructions will ensure that the title is joyfully transferred out of your name and will help to prevent you from receiving any unpaid traffic tickets which may be acquired by the next owner of your car. It is joyful for the charity since they will not have to deal with any title or ticket issues which could delay the sale of your car.

When you donate your car to charity, they will be very joyful because the revenue generated from the sale of your car donation will help them to further their mission. Those that benefit from the programs of the charity will also be joyful to receive that assistance. The poor economy is putting a lot of strain on charities to provide more assistance.

When you donate car to charity you will receive a joyful tax deduction. You will also be joyful because you will free up space in your yard, and not have to pay anymore for the car insurance, registration fees, inspection fees, etc. In fact, you may get money back for any unused insurance or registration.

Most charities are very joyful to let you donate car that is old, no longer runs, has a lot of body damage or needs a lot of mechanical repairs. That makes it joyful for you since you will not need to make any repairs to the car to continue to drive it or to get it to pass inspection or to be able to sell it.

When you donate car to charity, you will be joyful to know that your car donation will help to support a very good cause. You will also be joyful when you see the wide variety of charities you can donate your car to through Cars4Charities. They represent charities that provide international aid, or support research on many diseases and aliments, or help young people, or assist people or animals who have been abused or who are injured, sick or in need of food and/or shelter.

To donate car, just go to the Cars4Charities website, http://www.cars4charities.org/ or call them toll free at 1-866-448-3487. They will joyfully provide you with all the car donation details.    

The ABCs of Car Donation – I is for Investigate

Investigate the charity or car donation center you are thinking about donating your car to. All charities and all car donation centers are not alike. As with everything is life, there are some good ones and there are some unscrupulous ones. You will not know if you do not investigate them. There are some relatively easy ways you can do that.

Before you donate your car to a charity or a non-profit car donation center, you should check out their tax filings by simply logging onto irs.gov. Once you do, click on the charities and Non-Profits tab and then the Search for Charities button on the left. You can also check them out through sites like Charity Navigators, GuideStar, etc. You should also check with the Attorney General’s office for your state to see if any complaints have been filed against the charity. In 2010, the New York State Attorney General launched an investigation into several alleged “scam” car donation charities in the New York City area. One of them was actually shut down because it used less than two percent of the money from car donations for charitable purposes.

The other thing you should investigate is the tax deduction you will receive when you donate car. Most charities sell car donations because there is too much liability involved in giving a car to a needy person or selling it to them at a really low price. In addition, charities rely on the proceeds from the sale of car donations to help them fund their mission.

If the charity sells you donated car, you can claim the greater of $500 or the amount the charity actually sells your car for. To maximize your tax deduction, you will need to investigate how the charity or car donation center will sell your car. Some charities sell all car donations to the same vendor. This is never a good idea as the more competition there is the higher the sale price is likely to be.

Other charities auction all cars. This is a good thing if the donated car is in decent shape. However, if the car needs repair or is in poor condition, it may not bring the best sale price. The reason for that is because the buyer has to pay a fee to enter the auction and another fee to purchase a car at the auction. Buyers often take these fees into consideration when bidding on vehicles.

Often, the best sale price comes from using multiple vendors for selling donated cars. Here’s why. If the donated car is in good condition, it makes sense to sell it at auction so that more buyers are allowed to bid on it. If the car is in fair condition, selling it directly to a used car dealer may bring the highest price since they may be willing to pay more money for the car to avoid the fees charged by the auction facility. If the car is really in poor condition, a parts yard may be willing to pay top dollar for it so that they can re-sell the useable parts and the scrap metal from the car.

Investigating the method the charity or car donation center will sell your car for will help you determine whether they will get you the best tax deduction for your donation.

The ABCs of Car Donation – H is for Help

If you have a car you no longer want or need, please consider car donation. When you donate your car to charity, it helps in a lot of ways. If your car donation is in good shape, the charity may decide to use it themselves. This helps them tremendously since they will not have to spend money on a vehicle to use. If your car donation is not in good condition or the charity does not need it for themselves, they may sell it.

The sale of your car will help many people. The charity will use the proceeds from the sale to help them further their mission. They may use it to conduct research on a variety of illnesses or issues. They may use it to provide information or services to those inflicted with illness, or they may use the proceeds to provide counseling services or for education. They may also use the proceeds to help provide shelter, food and medical services to needy individuals or animals.

In addition, if your car donation is sold it will help your community. Most car donations are sold through auctions, or directly to used car dealers or salvage yards. Auction facilities charge a fee to sell donated cars. Those fees help them employ more staff. The used car dealers have to repair car donations so that they are road worthy before they can sell them to the public. This helps provide a source of revenue to the dealer as well as the repair shops. It also helps to provide reliable transportation to the public. If your car donation is in poor condition the charity will probably sell it to a salvage yard. The salvage yard will sell all the useable parts from it for a price that is a lot less than the cost of new parts. That will help people who do not have a lot of money keep working by keeping their car on the road. Once all the useable parts are removed from the car, the salvage yard will crush the rest and sell the scrap metal. That will help provide construction materials both here and in other countries.

In a few cases, charities will give or sell donated cars at a greatly reduced price to help a needy person. Usually, they do this so that the person will have adequate transportation to and from work. This helps the person become independent, which in turn helps the economy since they will be purchasing more goods and services. A person who is working is paying taxes instead of receiving assistance from the government. That helps their self esteem and helps all of us taxpayers.

When you donate car to charity, you also help yourself. You get rid of a vehicle you no longer want. That helps to clear your yard. You will also help your wallet when you donate car since you will probably get a rebate on your car insurance, registration or license fees. Best of all, you will be helped by getting a valuable tax deduction.

The ABCs of Car Donation – G is for Good

There are good car donation centers and there are some not so good ones you can donate your car to. In 2010, the attorney general for New York State launched an investigation into several possible “scam” car donation charities in the New York City area. One car donation center was actually shut down because it used less than two percent of the money from car donations for charitable purposes.

You can easily find out whether the car donation charity you are thinking about donating your car to is a good one or not a good one. You can check them out through the attorney general’s office for your state. You can also check them out through the internet. With all of the really good car donation centers out there you can donate car to, there is no reason to choose any center that is not good.

Once you do find a good charity to donate car to, you will feel good about your decision. Your car donation will do a lot of good as well. If your donated car is in good condition, the charity may decide to use it themselves for their own charitable purposes. They may even decide to sell it to a person in need at a greatly reduced price or even give it them.

If your donated car is not in good condition, but is easily repairable the car donation center may repair it before they sell it. If your donated car is not easily repairable, the car donation center will sell it as it is. You can still feel very good about donating a car that is rusted or is basically junk. Since the price of scrap metal is up, the charity will be able to sell it for good money.

Most car donation centers sell all donated cars in the condition they are donated in. They do it because it is good for them. It is good for them because they do not have the expense of making repairs, they do not have any liability issues and they get the cash for the cars quicker. Improving their cash flow is a very good thing for the charity.

Another good thing about car donation is the good tax deduction you will get when you donate car. In general, your good tax deduction will be the amount the charity sells your donated car for or $500, whichever is more. However, if the charity uses your car, sells it to a needy person for an extremely low price or gives it to them, your good tax deduction will be the fair market value of the car.

There are a great many good things about car donation. You get rid of a car you no longer want or use. That alone is a good thing. The charity you donate car to will either put it to good use or get some good money for it which will help them do good things. You will also get a good tax deduction when you donate car. Car donation is truly all good.

The ABCs of Car Donation – F is for Free

When you donate your car to charity, you will be free from many things.  You will be free from the hassle of dickering with the car dealer over the trade in amount of your car. According to most auto buying guides, not having a trade in will free you up to negotiate a better sale price on the purchase of a new car or quality used car.

You will be free of the cost of having to advertise your car for sale in the local paper or on line. You will be free in any costs involved in repairing your car to make it easier to sell. Most charities will gladly let you donate car that needs a lot of work or does not run.

You will be free of the inconvenience and risks of having to wait for strangers come to your home to look at your car. You will be free of the aggravation of having those prospective buyers offer you a low ball amount for your car. Since you will not have to wait for prospective buyers to call or visit, you will have a lot more free time to do other more important things.

If your car is in really bad shape and does not run, you will be free from the cost of having a junk yard come to haul it away. You can donate your car to charity even if it is junk. The call to the charity is also free. Once you have everything is coordinated with the charity, they will dispatch a tow truck to pick up your car. The pickup of your car is another thing that is completely free.

Once your car is picked up, you will have a lot more free space in your garage or driveway. You will also be free of any more car insurance, registration, inspection, licensing fees, etc. In fact, you may be due a rebate on some of the fees you have already paid.

When you donate car to charity, you will receive a free tax deduction on your itemized federal income taxes. In most cases, the amount of your tax deduction will be the amount the charity is able to sell your donated car for or $500, whichever is greater. The charity will indicate that amount in the tax paperwork they send you. That paperwork will, of course, be free.

Finally, the best free thing is the wonderful feeling you will get knowing that your car donation will be used to help support a very worthy cause.

The ABCs of Car Donation – E is for Execute

Once you have determined what charity you want to donate your car to, you have to execute the transfer of your car and its title to the charity. With respect to the title, make sure you fill in the correct odometer reading and sign your title in the correct location. You are the seller, the charity is the buyer. Therefore, you have to sign it in the place marked “seller’s signature” If your car is titled in the states of Arizona, Kentucky, Louisiana, Montana, North Carolina, Ohio, Oklahoma, Pennsylvania, or Wyoming, your signature on the title has to be notarized. Do not sign the title in the “re-assignment by licensed dealer section”. If you are not sure where to sign it, find out from the charity or your local Department of Motor Vehicles.

You also need to make sure you sign your name the way it appears on the front of the title. For example, if the title is in a maiden name, the signature needs to be as well.  The exception to this occurs when the title is in the name of someone who is deceased. In this case, the title should be signed by the executer of the estate. In addition, you will need to provide a copy of the death certificate and a copy of the will or power of attorney.

If you make a mistake on the title, DO NOT scribble it out or use correction fluid. If you do, it will void your title and you will have to get a duplicate title before you can donate car. If you make a mistake, put one line through it and sign either above or underneath it. You can also use an affidavit of correction.

Next, fill in the name of the buyer. That name will either be the name of the charity you are donating your car to or the car donation center representing them. DO NOT leave the name of the buyer blank!

There are basically three ways to deal with the title. You can simply leave it in the car, you can hand it to the tow truck driver or you can mail it to the charity or the car donation center. DO NOT leave the title in the car! This may seem like the most convenient method, but it also has the most risk. If you leave the title in the car and the tow truck driver does not leave you a receipt, you will have no proof of your car donation. Leaving the title and the keys in the car is also an invitation for someone to steal your car!

Handing your title directly to the tow truck driver is safer, but still has some risk. Most charities do not pickup car donations themselves; they hire towing services to do that. Therefore, the tow truck driver will not be able to examine your title and other documents to make sure they are all in order. Also, most towing services pickup car donations for multiple charities. Therefore, you will need to make sure you get a receipt that is for the correct charity.

Another risk associated with giving the title to the tow truck driver is that they could lose it. This is a major inconvenience for you and the charity. It is for you, since you will probably have to get a duplicate title and the sale of your car will be delayed.  The average cost of getting a duplicate title is $20. It is an inconvenience for the charity because of the delay in the sale of your car. This means that they will not only have to wait for their money, but they may have to pay storage fees as well.

DO NOT hand over your title unless you have the name of the buyer completed.  If you do and the tow truck driver is unscrupulous, they could write their own name in as the buyer and can in effect legally steal your car. This is rare, but it can happen.  

Many people are hesitant to mail their title for fear of it being lost in the mail. Mailing it in a manner that provides you with a tracking number will minimize this risk. Mailing the title to the charity is actually safer for you and the charity. First, once the charity or car donation center receives your title they will be able to tell you if everything is in order before your car is picked up. If there is a problem, they will advise you on the proper way to fix it.

Now that all the title issues are handled, you just have to execute getting the car to the charity. First, make sure you remove all your possessions from the car, including the toll tag, garage door opener, etc. You should also vacuum out the car. This will help it to sell for a higher price, giving you a better tax deduction and the charity more money.

If the car is in your driveway, position it where the tow truck can easily get to it. Make sure all four tires are inflated. If one tire is flat, your driveway may be scratched when it is pulled onto the tow truck. If your car is licensed in any state except, Alaska, California, Delaware, Hawaii, Kentucky, Minnesota, Oklahoma, Oregon, South Dakota, Texas or Washington, you should remove the license plates. You will need to transfer them to another car or return them to the Department of Motor Vehicles so you can cancel your car insurance. If your car is licensed in New Jersey, New York or Pennsylvania, you should scrape the inspection and/or registration sticker off the windshield. This will prevent you from receiving any unpaid tickets issued to the next owner of your car.

If your car is parked on the street, you will need to wait for the tow truck to arrive before you remove the license plates and stickers. If you remove them prematurely, you may receive a ticket.

Car donation is a very charitable act that has many rewards for you and the charity. As always, the correct execution is the key to a successful outcome.

The ABC’s of Car Donation - D is for Document

Document everything between you and the charity you donate your car to. You will need these documents when you do you taxes or if you are audited by the IRS.  If you cannot provide the proper documents regarding your car donation you may not be able to claim the tax deduction.

If you complete an on line car donation form, print the form. If you speak to someone on the phone, make notes including the name of the person. You should also make a copy of the title to your car and lien release if there is one. It is also a good idea to take some pictures of your car. If the IRS disputes the amount you claim for your car donation, pictures will help you prove your case.

Many car donation centers will ask you to mail your title to them. They ask you to mail the title because it is safer for you to have the title in the hands of the charity rather than those of the tow truck driver. Most towing services pickup car donations for multiple charities. Therefore, it is very easy for them to get the paperwork mixed up and leave a receipt from a different charity. Keeping all the communication between you and the charity actually simplifies the process. When you mail your title, make sure to mail it certified, priority, registered or overnight. That way you will have a tracking number. That tracking number and post office receipt will be a record of your car donation.

If you do decide to allow the towing service to pick up your title along with the car, make sure the tow truck driver signs a statement acknowledging your donation. Never leave the title in the car and let the towing service to pick them up without anyone being present. If you do and the tow truck driver fails to leave a receipt, you have no car, no title and no documentation of your donation.

Whether you mail your title to the charity or give it to the towing service, it is very important to keep a record of the name and phone number of the towing service. That way, you will know who ultimately took possession of your car.

Once you donate car, the charity will send you an acknowledgement of your car donation. Most charities sell donated cars. If that is the case with your car donation, the charity is required to send you IRS Form 1098-c if the vehicle is sold for more than $500. If the charity keeps you car donation for their use, makes major repairs to it before selling it, or gives it to needy person, they are required to send you a letter indicating that. It is very important that you keep the letter or 1098-c form from the charity. You will need this documentation to claim your tax deduction when you file your taxes.

Keeping all the documentation regarding your car donation will also protect you if you receive any notices, etc. from the Department of Motor Vehicles. It often takes States several months to record title transfers in their computer systems. If your car donation is sold in a neighboring State, the title transfer will not be recorded in your States’ system.

C is for Consider

Consider all of the aspects of car donation, both the positive and the negative. There are many practical reasons to donate your car to charity. It is much easier than trading in your car at a dealership and arguing over the trade in amount. It is also easier than trying to sell your car privately. You don’t have to wait for the phone to ring or for people to come to look at your car. And if your car does not run, is rusted or needs a lot of repairs selling it might be very difficult. When you donate car, you are eligible for a tax deduction of $500 or more. And, of course, you help a charity when you donate car.

There can be a negative side to car donation which you should consider.  One thing to consider is the tax deduction. You can only claim the deduction if you itemize on your federal tax return. If you don’t have enough deductions to itemize, you won’t get a tax benefit from your car donation. If you are not sure if you can itemize on your taxes, check with the IRS or a tax advisor. Also consider the reputation of the charity or car donation center you are going to donate your car to. It is very easy to check out a charity online or through various agencies like the IRS, Attorney General, etc. There are plenty of reputable charities you can donate car to; there is no reason to use an unscrupulous one. The “fly by night” ones may be out of business tomorrow and any record of your car donation will be gone.

You may also wish to consider the amount of money the charity you donate your car to will get from the sale of your car donation. Some for-profit car donation centers only send a small percentage of the proceeds from the sale of car donations to charity. Also, if you donate car to a car donation center that advertises a lot, a portion of the proceeds from the sale of your car donation will go to pay for those ads. If this concerns you, look for another charity to donate your car to.

The benefits of car donation greatly outweigh the disadvantages. You’ll reap only the benefits when you consider all the possibilities and act accordingly.

B is for Beware

Beware of false claims.  Beware of any charity or car donation center that uses any of theses phrases; “full fair market value”, “maximum value”, “maximum deduction” “huge tax deduction”, “fully tax deductible” or “tax credit”.   First, there is no tax credit allowed for a car donation. The IRS allows a tax deduction.  A tax credit and a tax deduction are 2 completely different things. In order to claim a tax deduction, you have to itemize on your federal income tax return. This is generally known as “filling out the long form”.

The tax rules regarding the amount a donor can claim for a car donation changed effective January 1, 2005. If you donate your car to charity, the amount you can claim for your tax deduction depends on what the charity does with your car and the fair market value of your car on the day you donate car.

The fair market value is the amount you can reasonably expect to sell your car for in the open market in its current condition. Besides looking at local car ads, you can use several pricing guides to help you determine the fair market value of your car. Some of the more popular guides are the Kelly Blue Book, the National Automobile Dealers Association guide and the Edmunds guide. They all will help you determine how to value your car based on its condition, mileage and accessories. Use the figures for private party sales not the retail sales. Beware of over estimating the fair market value of your car. If you do and the IRS chooses to audit your tax return, you’ll not only lose part of your tax deduction, you may have to pay a penalty as well.

The other factor that determines the amount you can claim for your tax deduction when you donate car is what the charity does with your car. If the charity uses your car for their purposes, gives it or sells it a greatly reduced price to a needy person or makes substantial improvements to your car before selling it, you can claim the fair market value. These practices, however, are not the norm. Most charities sell car donations as-is. If the charity sells your car, you can claim the fair market value up to $500 or the amount the charity sells your car donation for if it is more than $500. IRS publications 526 and 561 will give you complete details on how to determine your tax deduction.

Beware of slick advertisements especially if you are concerned about how much of the proceeds the charity will get from the sale of your car donation. Radio and newspaper ads and billboards are very expensive. The donation centers that run these ads use a portion of the proceeds from car donations to pay for them.

Donating a car to charity can be a beautiful thing if you know how to avoid the pitfalls.

A is for ASK

Ask questions. The more you know the more informed decision you will make regarding whether to donate your car and what charity to donate car to.  Here are some questions, you should ask:

1. What kind of vehicles does the charity accept for donation? Some charities only accept cars that run and are less than 10 years old. If your car doesn’t qualify, the sooner you know it, the less time you’ll waste and the sooner you can look for another charity that will accept your car.

2. What will the charity do with my car? The answer to this question is very important as it affects the amount you can claim for your tax deduction. If the charity uses your car for its purposes, makes major repairs to it or gives it to a needy person, you can claim the fair market value of the car. If the charity sells your car, which is what most charities do, you can claim the amount they sell it for or $500, whichever is more.

3. Do I have to pay to have my vehicle picked up? If the answer is yes, call another charity. You should never have to pay to have your vehicle picked up.

4. What kind of receipt for tax purposes will I receive? The answer depends on what the charity does with your car donation. If it the charity plans on using the car, repairing it or giving it away, you should receive at letter indicating those intentions. If the charity sells your car donation for more than $500, they are required to provide you with IRS Form 1098-c. If your car donation is sold for less than $500, the charity is simply required to provide you with a written acknowledgement of your donation. For complete details, see IRS Publication 4303.

5. What do I do with the title to my car?  Some charities will ask you to give the title to the tow truck driver, while others will ask you to mail the title to them via certified mail. The reason some charities will ask you to mail the title is because it is safer for you to have the title in the hands of the charity rather than those of the tow truck driver. The receipt from the certified mail will be your first proof that you donated your car. Also, if you mail the title, you may not have to be present when your car is picked up. Never, leave your title in the car. If you do, you could end up with no car and no proof of your car donation.

6. What do I do with my license plates? If your car has license plates from any Sate except Alaska, California, Delaware, Hawaii, Kentucky, Minnesota, Oklahoma, Oregon, South Dakota, Texas or Washington State on it, you are required remove them and either return them to the Department of Motor Vehicles or transferred them to another car. Many of those States will not allow you to cancel your car insurance until you have done so. Do not leave your car parked on the street without license plates on it. If you do, you may get a ticket or your car may be impounded before the charity’s towing service arrives to pick it up. In this case, you will be liable for all fees.

7. Will the charity process your car donation themselves or use a company to do it? If the charity uses a company, you may want to know how much of the proceeds the charity will receive.

The more informative you have, the more you will be able to determine if you want to donate car and if so, what charity you want to donate car to.