How To Write a Donation Car Off on Your Taxes

Introduction

There are many things that you could put on your tax declaration as a write off lowering the amount of declared income that you pay taxes on. One of these is to include a donation car as a tax deductible. Many people do not know that donating a car for a cause can be used in tax declarations much in the same way that you would give old clothes away to the Salvation Army or any other charitable organization.

If your donation car is a charity far from where you live, there are middlemen or reputable companies that take care of picking up the car, appraising its value, and then selling it. They will charge something for taking the vehicle and selling it, while the rest of the amount is donated to the charity that you chose.

Step 1

Select the charitable organization

Finding a charity in your area is the best option as this will not only assure you that it is a legitimate organization, but will save the organization the hassle of hiring someone or a company to pick up your car. An important thing to remember is that the charity you have in mind should be a 501-c3 charities in order to qualify for the deduction. These may be educational, religious or charitable organizations. Check IRS Publication 78 to see the list of qualified charities. Not all charities are listed in this publication such as churches, temples, and synagogues. For further information, call Customer Account Services of the IRS. 

Step 2

Prepare your donation car papers

Check that all of your papers are in order such as the Blue Book, registration records, and all other papers pertinent to the vehicle. If you got the car appraised before making a donation, make sure that you have a copy of the report. Cancel your insurance the moment you are handing the car over to the charitable organization.

Step 3

Draw up the transfer papers

Transfer of ownership is very important as this proves that you no longer own the car and are not liable for anything that might happen such as road accidents or damage to property. If you chosen charity is asking a middleman to collect the car for you, make sure that the transfer of ownership documents are signed or that the charity sends you the title transfer. Should you decide to drive the car yourself to their offices, make sure that the documents are all filled out and signed.

Step 4

Prepare tax income declaration

When it’s that time of the year, include the car donation that you just made as a deduction. Note that you can only do a donation car deduction if you are itemizing costs. The amount that you can put as a deduction varies using  the fair market value of the car, resale value or the appraised blue book value. It also depends whether the charity sold the car as is or as junk and received the sale proceeds. It can range anywhere from $500 to $1000. Details on the amount you can put as donation car deductibles are found on the IRS website.

Step 5

Attach supporting documents of the donation car

Once your tax income declaration is complete, attach the required supporting documents. The IRS will need the proof of car donation and the title change to support the claim. You might need to include the appraisal report or the resale value attestation from the charity. 

Tips

The good thing about a donation car is that you don’t have a vehicle that just sits in your driveway, occupying space while you continue to pay for running costs and insurance. Isn't it great that your old clunker is going to be used for a good purpose, supporting a charitable cause and at the same time increase your tax deductibles?

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