’Tis the season to be charitable. For some people, that means donating a vehicle. You can donate your car through a local chapter of a national organization, including the Red Cross, Habitat for Humanity, and many others. Or you can contact a group that specializes in car donations and will pick up cars, sell them at auction, and give a charity some of the proceeds.
Ask the charity whether it’s qualified to receive tax-deductible contributions. Most approved charities are listed online in IRS Publication 78 (www.irs.gov/app/pub-78).
The IRS says a donated car worth more than $500 that’s kept in use by the charity—bringing meals to seniors, for instance—can be deducted at its current fair market value. But if it’s sold at auction by the charity, you can deduct only the auction price. If the charity takes cars that can’t be driven, the donation might be worth no more than a lug nut.
Ask the charity’s development office. Look for a share of at least 15 percent.
The Better Business Bureau recommends giving to charities that devote at least 65 percent of donations to good works. The BBB’s National Charity Reports Index (www.bbb.org/charity) rates charities on 20 standards. Charity Navigator (www.charitynavigator.org) has information, too. Both services are free.
After you donate your car, record the name and address of the charity and the date of your donation. Get a receipt. Keep a copy of the title transfer. Report the transfer to your state motor-vehicle department and cancel your car insurance.
Remove the vehicle’s license plates—unless state law says otherwise—and the registration and inspection stickers. That way, you won’t be sideswiped by a later owner’s violations.