‘Bout done with that old set of wheels? Donate your car! Organizations around the country will be happy to take it off your hands. If you have car you can’t sell (or even if you could sell it) consider donating it, either out of the goodness of your warm and fuzzy heart, because of the likely sizable tax break you’ll receive, or a little bit of both.
At many vehicle donation charities, including the national ones listed below, you not only can donate any type of passenger vehicle, you can also donate boats, RVs, and motorcycles and more.
We’re all for the spirit of giving, so we’ve pulled together some important steps to follow to ensure you donate to a reputable charity, save on your taxes, and do maximum good.
How to Donate Your Car to a Reputable Charity in 9 Steps
Sadly, unscrupulous people* take advantage of the big-hearted and run either complete scams or charities that only barely qualify as such. How to prevent that from happening to you:
- Check the charity’s rating with an independent watchdog like Charity Navigator or BBB Wise Giving Alliance. “Though each watchdog has its own system for assessing charities, they all use similar criteria. For example, CharityWatch says that for a group to have a satisfactory rating, at least 60 percent of its spending should go to the charity’s programs. To garner its top rating, 75 percent of a group’s expenses must be used for its programs, and its fundraising costs cannot exceed 25 percent of the money it raises,” writes Consumer Reports. Be wary of any donation offers that seem too good to be true.
- Find out what the charity will do with your car and any funds they receive from its sale. You can ask the charity directly, and you can (and should) review their financial reports to see what percentage of funds goes toward administrative costs and what percentage goes toward helping those in need. (A list of several national vehicle donation charities and their stats can be found here).
- Donate your vehicle directly to the charitable organization of your choosing and avoid using a third party as they just dilute the funds.
- Drive your car to the charity rather than using a towing service if you can. This will help ensure that more funds will go to help those in need. Some vehicle donation charities are able to cover the cost of towing for a small fee, so if your car doesn’t run, you might still consider them. Just understand the details ahead of time.
- Transfer the vehicle’s title upon donation. Don’t leave the assignment of ownership line blank (even if the charity asks you to) because you could be liable for parking tickets or even blamed in a crash after your donation.
- Cancel insurance coverage on the vehicle you’re donating. Not to worry – it’s not complicated. According to The Zebra’s own licensed insurance agent and adviser Neil Richardson, as far as the insurance is concerned, donating your car is no different than selling it to a private individual or dealership. “Once the title is transferred over, then the former owner (you) no longer has any ‘insurable interest’ on the vehicle. That is, you’re no longer at risk of being on the proverbial ‘hook’ for any damage caused to or by the vehicle.” Canceling your policy may result in a refund from your insurance company, too.
- Remove your license plates and return them to the DMV yourself before donating your vehicle.
- Get a receipt from your donation – and hold on to it. Charity Watch says that non-cash donations are one of the biggest triggers for an IRS audit, so you’ll want to have (and keep) all your paperwork in order.
- Request privacy. Charities often share or sell donor info, so if you don’t want to end up on a million lists, request privacy, says Consumer Reports.
National Charities for Donating Your Car
Charity Cars supports veterans and disadvantaged families as they transition from dependency to self-sufficiency. Unlike other vehicle donation organizations, Charity Cars doesn’t sell donated vehicles and then donate the profits to a charity program. Instead, Charity Cars refurbishes donated vehicles to ensure safety and reliability and gives them to a family in need to help them get to work. They also often pay for insurance, license plates, and vehicle servicing. If your car can’t be used by the program, it will be sold, and Charity Cars will use the funds to continue their programs.
How to donate your car to Charity Cars:
- Fill out the online form (or call toll-free 1-800-242-7489).
- Arrange for vehicle pick-up (usually within 24 hours).
- Receive a tax deductible receipt.
Charity Cars gets top marks from Charity Navigator overall, for their financials (94% of donations go directly to helping those in need), and for their transparency.
Kars 4 Kids
Funds from donated vehicle sales go toward the Kars 4 Kids charity program, which aims to positively impact a child’s life and education. Vehicles in almost all conditions are accepted (including those that don’t run or can’t pass the emissions test).
How to donate your car to Kars 4 Kids:
- Fill out the donation form online.
- Kars 4 Kids will contact you to set up a pick-up time.
- You’ll be mailed a tax receipt and a vacation voucher. (This is for a 2-night, 3-day hotel stay in one of many popular U.S. destinations, but be aware that if you receive something in return for your donation then you might not be eligible for a tax deduction of the full amount. Check with the good ol’ IRS).
Kars 4 Kids handles vehicle pick-up and sale themselves, which, they say, means more of your donation goes toward helping children. You can see Kars 4 Kids’ charity stats here.
Cars for MADD
Cars for MADD (Mothers Against Drunk Driving) collects funds from donated vehicles and contributes them toward helping victims and survivors impacted by drunk driving. Vehicles in almost any condition are accepted.
How to donate your car to MADD:
- Fill out the online form.
- MADD will pick up your vehicle from one of several locations in almost every state plus D.C., and will tow it at no cost to you.
- All donations are tax deductible. MADD will send you a donation receipt that you’ll use when preparing your taxes.
See Charity Navigator’s review of MADD here.
Note also that national and international charities like Make-A-Wish and the Humane Society function differently in different states. For example, the Connecticut Humane Society gets excellent watchdog reviews as does the Hawaii Make-A-Wish organization, but the same charities in other states might not fare as well.
You can also use a company like Donate for Charity, Inc, a nationwide car donation program that promises to maximize both your donation and the size of your take refund. Donate for Charity Inc has a BBB rating of A+, but it isn’t a nonprofit or a charity, though they promise that 70-80% of your donation will go to your chosen charity. Not bad, but not the highest rates, either.
Other smaller charities that accept vehicle donations exist, and if you find a local organization you’d like to support just make sure to follow the above advice and ensure they’re reputable.
How to Save on Taxes by Donating Your Car
Unfortunately for the paperwork-averse among us, when you donate your car to a charity your tax deduction isn’t automatic, nor is it guaranteed. You’ll have to take a few important steps before you feel that relief come tax season.
Tax deduction detail (this IRS guide will walk you through each step):
- Make sure the charity is a 501(c)(3) organization or that it is able to receive tax-deductible charitable donations (the IRS has the details), otherwise you won’t be able to claim the deduction. Look up the charity yourself or ask them for these forms.
- You may deduct the Fair (or True) Market Value of your donated vehicle up to $500, and you (the donor, not the charity) must determine the FMV. Edmunds and Kelley Blue Book are reliable resources.
- If the charity uses your vehicle for their program (as with Charity Cars), you can deduct the Fair Market Value.
- If the charity sells the vehicle for more than the FMV, you can use the higher amount for your deduction.
- If your car is worth more than $5,000, you’ll need an independent appraisal.
- In order to claim the vehicle donation to a charity, you’ll have to itemize your deductions on Schedule A of Form 1040, rather than using the standard tax form.
If you want to claim your vehicle donation on your 2016 taxes, you’ll have to complete your gift before the New Year. There are just a few days left to save on your 2016 taxes, but you can of course still donate any time afterwards and save on the following year’s taxes. And, good will never has an expiration date.