Donating a car is an honorable move, whether it's to help a charity with travel arrangements, you're having trouble selling the car at the rate you believe it's worth or you're just tired of the car. And it is possible to get a tax deduction for car donations, but the Internal Revenue Service has guidelines (Publication 4303) that must be followed in order to get that tax credit.
Verify the Charity
Qualified organizations used to be searchable by looking at "Publication 78, Cumulative List of Organizations" described in Section 170(c) of the Internal Revenue Code. However, now users can search the Exempt Organizations Select Check database. Use this search engine to type in the Employer Identification Number (EIN), the company name, city and state. Churches, synagogues, temples and mosques are not required to apply to the IRS for recognition so there may still be certain organizations missing from this list. Try contacting the IRS' Customer Account Services division for Tax Exempt and Government Entities at (877) 829-5500 as a second option. A third option is to look the charity up on the site for the National Association of State Charity Officials.
All eligible charities must be willing to undergo public inspection to receive donations. Possible documents that may be required by the IRS are a copy of the recent annual information returns (Form 990) and an application for tax exemption.
Get a Written Estimate
Kelley Blue Book is a good research tool to use to find out the value of your car. However, if the car has damaged internal or external parts that must be repaired during the donation period, the car estimate must include this deduction. The charitable organization must give a written statement of the car's worth if it is over $250. However, the estimate does not have to be written on the charity's written statement.
The charity must provide the charity's name, the description of the car, and one of the following:
- a statement that no goods or services were provided by the charity to receive the car donation
- a description or estimate of any goods or services that the charity provided for this donation (if any)
- a statement that goods or services that the charity provided for the car donation were for religious beliefs (if this is the case)
Disclose Sales Information
If the charity decides it wants the donated car to sell on its own to raise funds, then the charity must file a Form 8282 "Donee Information Return" with the IRS. The charity must identify itself and you, as the donor, and any funds it received for the car sale. The charity must also give you a copy of that form for your own records.
