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Donate a Car to Charity if it Doesn't Run

Updated on March 4, 2013
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You hear ads on the radio and see them on television: Charitable organizations asking you to donate a car. It sounds a little too good to be true to be able to get rid of your old junker for free and potentially receive a tax benefit -- especially if your car is not working. But it is possible to donate a car to charity if it doesn't run.

How It Works

Charitable organizations can make money from your working or non-working car by selling it for cash. In the event the care does not work, it can be sold for parts or scrap. This can often bring in a large amount of money to the charity. You, as the donor of the vehicle, get to claim the value of the vehicle as a deduction on you income tax return, or if you don’t itemize, simply get a non-working vehicle off your hand.

Research the Charity

It is imperative that you check and make sure you’re working with a legitimate charitable organization. You can do a basic background check by simply doing an online search to learn more about the charity. The Better Business Bureau is an excellent resource for checking the background of a charity. Keep in mind that in order to qualify for a tax deduction (if you itemize), the charitable organization must be registered with the Internal Revenue Service (IRS) as a tax-exempt entity under section 501(c)(3) of the tax code. In fact, you can check whether an organization has tax-exempt status by searching on the IRS web page.

Oftentimes, the organizations that are aggressively seeking donations of vehicles are actually intermediaries. They take a cut of the value of the vehicle, leaving only a percentage for the charity. This further underscores the need for a background check on the organization. It is always easier to work directly with your chosen charity than to go through a middleman. If there’s a charity you want to donate to, simply call and ask them if they accept vehicle donations.

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Practical Steps

Once you’ve chosen a charity to donate your vehicle, there are some important steps to take.

· Check with Kelley Blue Book, a widely recognized car value source, to determine the value of your vehicle. Be honest when you’re searching for your vehicle to get the most accurate value. Many organizations will credit you with a Kelley Blue Book value for the vehicle, and Fair Market Value is what you’ll be able to claim on your tax return.

· If the charity accepts non-working vehicles, make sure they will come and pick it up from you. Many organizations that accept non-working cars have relationships or contacts with local towing companies that will come to pick up the vehicle.

· Work through your state’s Department of Motor Vehicles to transfer the title of the vehicle out of your name and into that of the charity. This will eliminate the risk of tickets in your name after the vehicle has been sold to another party.

· Get a receipt from the charity. This may seem like a no-brainer, but it is imperative that you have a written receipt from the charity for tax purposes. Make sure that the receipt contains the full name of the charity, its tax identification number, the address of the organization, and the value of your vehicle.

Donating your vehicle is great way to assist a charity you admire while simultaneously ridding yourself of a defunct vehicle. It can be a painless process as long as you make sure to keep accurate records of the contribution.

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