Car donation has become a popular way for people to get rid of old cars in recent years, but there are a lot of aspects of this process that many people considering it are not aware of. While car donation is a good way to support a favorite charity, it is important to take some small precautions when using this route to get rid of a vehicle.
First, make sure you to check out the charity that the car is being donated to. While there are a number of websites that rate charities, try to visit the charity in person. Find out how the car you donate will be used. Some charities have auto shops on site and they will use the cars to teach auto mechanic skills. Other charities, however, simply give the car to an auction house and use the money from its sale to support their programs. While how the car is used doesn’t matter to some people, other people have strong preferences. Make sure the charity you choose will use your donation in a manner that you approve of.
Next, have the car appraised. While very expensive or rare vehicles may need a professional appraiser, most people can use general car websites to get an idea of the current value of their vehicle. Create a paper copy of the car’s estimated value and file it with your tax information. When it comes time to take a deduction for your donation, current IRS rules state that the amount you claim must be equal to the car’s current fair market value. Note that this has changed from the previous rule, which allowed taxpayers to deduct the value of the car when they purchased it.
Before donating the car, go through the vehicle carefully and remove any items you wish to keep, as well as any papers with identifying information. While this step may seem obvious, it is often forgotten by many people, leaving a charity with the responsibility of cleaning out the donor’s car.
Finally, be sure to follow the proper procedure in your state for transferring the vehicle’s title when you donate the car. Simply dropping the car off in front of a charity can result in the car being traced back to you. The charity should know the proper way to handle the donation. If not, contact your local DMV.