How to Donate Your Car & Receive a Tax Receipt
- 1). Make sure you donate your car to an IRS qualified charity; that is, a 501(c)(3) non-profit organization or one listed in IRS Publication 78. You must follow this rule, or the IRS will not allow you to deduct the donation.
- 2). Find a qualified non-profit. There are many in every community. Some specialize in taking used cars, even old cars, putting them in good working order, and then giving them to needy individuals who qualify under their organization's guidelines.
Other charities may need cash, so they will sell the car and use the money as they need it. - 3). Avoid for-profit organizations that will take your car and profit from it, while giving only a small portion to charity. They advertise heavily, in a manner that many charities cannot afford.
- 4). Transfer title to the charity. This will protect you from any responsibilities associated with misuse of the car, such as parking tickets.
- 5). Get a receipt from the charity for the amount that they actually get for the car. If they are keeping it or giving it away to someone needy, they can give you a receipt for fair market value. The IRS will let you deduct only that amount. Your estimate of the car's worth does not matter to them.
If the vehicle is worth more than $5,000, you will have to get an appraisal from a third party. - 6). Make sure to keep all receipts, appraisals and anything that might help you to show a paper trail.
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