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It sounds so simple: Donate your used vehicle or boat to charity, avoid the hassles associated with selling it, and score a tax deduction at the same time. Everybody wins, right?
Not necessarily. As the saying goes, the road to h-e-double-hockey-sticks is paved with good intentions, and it can be surprisingly easy to fumble this well-meaning act.
Before you hand one of your biggest assets over to anyone, read the following tips to be sure you’re making the right moves.
1. Avoid middlemen. Numerous for-profit intermediary organizations advertise aggressively on TV, billboards and elsewhere, offering to help you donate your vehicle to charity. Here’s the catch: These organizations typically keep about 50 percent to 90 percent of the vehicle’s value for themselves, and the charities don’t get what they could have gotten. To prevent this, check directly with charities you admire and find out whether they accept car or boat donations.
2. Find a worthy charity. If the charities you normally support aren’t equipped to accept such donations, do some homework until you find a reputable charity that is. You can research charities’ track records online at this Better Business Bureau site and through Charity Navigator.
3. Check the math. If you still feel compelled to use an intermediary organization – possibly because you’re busy – at least ask the organization how much of the car or boat’s value will go to charity. If the organization simply gives charities flat fees — say, $100 for a used vehicle regardless of its value, or $2,000 a month — your donation may not be eligible for a tax deduction.
4. Know the status of your recipient. In order for you to qualify for a deduction, the charity that gets your donation must be an IRS-approved 501(c)(3) organization. Your church, synagogue, mosque or temple likely qualifies. (Check first just to make sure.) You also can visit the Internal Revenue Service’s Web site and search for Publication 78 to find other qualifying non-profit organizations. (Just type “78” into the search field on the IRS home page and you’ll be directed to the right publication.)
5. Do the delivery yourself. Once you’ve identified a worthy charity, recognize that it will have to pay someone to pick up your car or boat for you. To help the charity maximize the benefit of your donation, drop the car or boat off yourself.
6. Transfer the vehicle with care. Want to eliminate all risk of running up parking tickets and other violations after you’ve said goodbye to your donated vehicle? Then formally re-title the vehicle to the charity, and report the transfer to your state’s department of motor vehicles or licensing. Never agree to leave the ownership space on the charity donation papers blank.
7. Your estimate of the donation’s value probably won’t cut it. If your car or boat is worth more than $500, the IRS is going to want to see evidence of how much the charity got for it. (Most charities that accept these donations turn around and sell them for cash.) You’ll need to get a receipt from the charity revealing exactly how much money it made.
8. Know when you can report the fair market value. You won’t need evidence of the sales price if the charity keeps the vehicle or vessel and uses it in its charitable work, or if your donation is worth less than $500. Then you can report its fair market value based on listings from Kelley Blue Book and similar sources.
9. Keep a thorough paper trail. If your donation is worth more than $500, you’ll have to attach IRS Form 8283 to your tax return. If it’s worth more than $5,000, your documentation must include an outside appraisal. You’ll also need proof of the donation, such as a receipt from the charity and a copy of the title change.
10. Be detail-oriented. This paper trail may seem cumbersome, but think about it: This may be one of the biggest charitable donations you ever make. By taking the time to dot the i’s, you can make sure that the charity gets the most benefit and you get the biggest possible deduction.
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{"commentId":2842245,"authorDomain":"alolson"}
Have you ever donated a car or boat or major item to charity? Any hassles?
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#1 - Tue Sep 9, 2008 3:31 PM EDT{"commentId":2855726,"authorDomain":"jnoel"}
First, you need to be sure you can itemize your deductions as most folks take the standard deduction. If you are using the standard deduction, you will get nothing for your donation! Talk to your tax preparer before you do this!
{"commentId":2855726,"threadId":"353291","contentId":"1845938","authorDomain":"jnoel"}
#2 - Wed Sep 10, 2008 10:40 AM EDT{"commentId":2863388,"authorDomain":"thumper667"}
My good hearted father in law donated his car last year to a well qualified 501(c)(3). He was given inaccurate information by the charity that he could automatically deduct $500 on his Schedule A regardless of what the charity auctioned the car off for. Later, after the charity auctioned the car off, the high bidder never changed the title or applied for plates and shortly therafter was involved in an accident. He gets a letter from the city (based on VIN#) asking him to pay for storage fees and towing charges or to sign off the title (on the car he no longer owns) to the city. Spent more time documenting that he was not responsible. All in all a hassle where after the fact he said he wished that he just would have called the junk yard and just give whatever he would have got to his grandkids college fund...
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#3 - Wed Sep 10, 2008 3:27 PM EDT{"commentId":2954661,"authorDomain":"LauraTCoffey"}
Ack! What a horrible experience your father had! That's why tip #6 above is so crucial:
6. Transfer the vehicle with care. Want to eliminate all risk of running up parking tickets and other violations after you've said goodbye to your donated vehicle? Then formally re-title the vehicle to the charity, and report the transfer to your state's department of motor vehicles or licensing. Never agree to leave the ownership space on the charity donation papers blank.
{"commentId":2954661,"threadId":"353291","contentId":"1845938","authorDomain":"LauraTCoffey"}
#4 - Tue Sep 16, 2008 2:03 PM EDT{"commentId":2954722,"authorDomain":"LauraTCoffey"}
P.S. I also received these great suggestions from a reader via e-mail: "Thankfully, MADD has been an excellent charity (for car donations), especially since I was a victim of a DUI. (Another) charity people should consider donating their cars to is the local fire department. How do you think they practice putting out car fires and practicing the jaws-of-life? ;-)"
{"commentId":2954722,"threadId":"353291","contentId":"1845938","authorDomain":"LauraTCoffey"}
#5 - Tue Sep 16, 2008 2:05 PM EDT{"commentId":5232494,"authorDomain":"undiefreude"}
I better think twice before donating my car to charity... I think I better change some of the car parts (in which in my case I use for my car) before giving them...
{"commentId":5232494,"threadId":"353291","contentId":"1845938","authorDomain":"undiefreude"}
#6 - Sat Feb 7, 2009 5:16 AM EST{"commentId":6149975,"authorDomain":"minimeffs"}
sadly, it's true - so many of these places are scams. i had a really bad experience nine or ten years ago and swore i'd never donate again, but my mom had a great experience with the habitat for humanity program so i tried it last month and am very pleased. the company that runs it - donationwizard.com - swears that 80% of the gross goes to charity, which is alot better than some of the "we give 50% of net" to charities. seemed totally up and up.
{"commentId":6149975,"threadId":"353291","contentId":"1845938","authorDomain":"minimeffs"}
#7 - Wed Mar 25, 2009 1:23 PM EDT{"commentId":6284984,"authorDomain":"barbhelen-bayes"}
There are 501(c)(3) organizations across the country that take donated vehicles, repair them and provide them to low income people at a significantly reduced cost so the people can get to work or job training. IRS allows donors to take full fair market value if a charitable organization uses the vehicle in the manner described above. Check out for more details. Transportation is a huge problem for people with low incomes in rural areas particularly. Your car donation can change someone life.
{"commentId":6284984,"threadId":"353291","contentId":"1845938","authorDomain":"barbhelen-bayes"}
#8 - Thu Apr 2, 2009 4:06 PM EDT{"commentId":6285174,"authorDomain":"barbhelen-bayes"}
The message above left out the website info... try googling Opportunity Cars or Good News Mountaineer Garage
{"commentId":6285174,"threadId":"353291","contentId":"1845938","authorDomain":"barbhelen-bayes"}
#9 - Thu Apr 2, 2009 4:17 PM EDT{"commentId":6345689,"authorDomain":"alexstyler"}
Car donations = big business. Your Rule #1 of Avoiding Middlemen is unfortunately obvious to only a select few Americans.. When charities plug a word like Kids, most people automatically assume "kids" are going to benefit. Many "charities" say they are helping children, cancer or Veterans but if you dig a little deeper, pennies on the dollar really go towards these causes.
A few examples I researched today include:
1. Cars 4 Causes - Keeps over 50% for themselves after towing and other expenses.
2. 800 Charity Cars - Somehow Montel, Oprah and Good Morning America got sucked into their claims before plugging them. Do a quick search on Charity Navigator under their business name which is Charity Cars. The President alone makes over $300,000 salary a year! Makes you wonder what their claim of being "100% Charity" means...
3. The worst in my opinion is Kars 4 Kids.. I just did a search on them through spy4u and it shows they spend between $11,000 to $38,000 DAILY on google adwords alone! That isnt even including all of the billboards I see here on the Jersey Turnpike and lets not even bring up their Kars 4 Kids song on the radio all the time. Obviously people are just looking for the easiest way to get rid of their car and why not help a kid? Unfortunately Kars 4 Kids is hiding under their real name which is Oorah whose specific goal is awakening Jewish children and their families to their heritage. Nothing to do with the term "kids" most of us think we are helping.
Too bad there isnt some sort of "Charity Police Department" that can shut these charities down. Newspaper reporters and TV reporters such as Shame On You have even done reports on these obvious fraudsters trying their best to inform the public with no long term results. Its just sad to me to see charity turning into a business rather then its true meaning and intention.
{"commentId":6345689,"threadId":"353291","contentId":"1845938","authorDomain":"alexstyler"}
#10 - Mon Apr 6, 2009 7:00 PM EDT{"commentId":6529770,"authorDomain":"papaver16"}
Thanks for the article Laura, very helpful. Question, when you say formally re-title the vehicle to the charity, does that mean writing in the name of the charity in the "Buyer" section on the back of the title ? Of course I sign the "Seller" section. Is that what you mean by a formal transfer ? Can I complete the "Buyer" line on the title or does that have to be done by an agent of the charity ? Thanks again, Chris
{"commentId":6529770,"threadId":"353291","contentId":"1845938","authorDomain":"papaver16"}
#11 - Thu Apr 16, 2009 6:55 PM EDT{"commentId":10406160,"authorDomain":"breelaboy"}
{"commentId":10435661,"authorDomain":"brianalampton"}
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