Donating a car to charity may be a worthy cause, and its use will affect how it benefits the donor financially as a taxpayer. Well-established organizations such as Habitat for Humanity and Make-a-Wish Foundation accept donated vehicles; other organizations, such as local high schools and vocational schools may accept vehicles for auto shop classes. When you donate one, its fair market value may usually be deducted from federal taxes.
Most charities partnering with car donation partner companies enlist third-party firms to assist with managing auctions of donated cars, maximizing returns for the charity on each vehicle donated and thus determining its donation value; fair market value can usually be determined using pricing guides such as Kelley Blue Book or National Automobile Dealers Association Used Car Guide; when giving their vehicle away they should give a receipt stating the year, make and model of it to ensure tax deduction.
Charity must notify donors in a timely fashion of how it plans to use or dispose of the vehicle they donate, such as its sale
amount as a tax deduction. Charities should also inform donors if it plans on giving away the vehicle instead or using it in its operations.
Some charities do not even sell donated vehicles; rather, they give or use them in their operations – such as transporting clients for medical treatment – without selling it themselves. If this occurs, your vehicle could possibly be exempt from IRS Section 170’s requirement that donors of property valued over $5,000 must obtain an appraisal report for it.
Sometimes re-titling of vehicles by charities is not desirable as this could put them on the hook for any parking tickets issued to it or liability in case it is used in crimes. Instead, in such instances they should provide you with written acknowledgement as well as Form 1098-C or 8283 (Noncash Charitable Contributions), depending on which form applies and keep a copy with your tax records.
