How to Donate a Car to Charity and the Tax Benefits Involved

It is easy for those who want to donate a car to charity. When you donate your car to charity there are tax benefits. There are also some risks, but it is easy to minimize the risk by following a few tips.

1. Find a Charity that Accepts Car Donations

To ensure that the full value of the car remains as the charity car donation, find one that will accept the car themselves. For-profit agencies that claim to handle the auto donation will sell the vehicle and keep the nearly 50 percent, sometimes even more. This is also the best way to maximize the auto tax write off that you can receive.

2. Drive the Car

To save the towing cost to the charity, drive the car to them yourself. This helps to increase the amount that goes to the charity organization's programs. If the car is towed, then the charity organization that you donated it to will be the ones to pay for the cost of the towing.

3. To Get a Tax Deduction

Once you have donated the vehicle, you are ready to fill out the tax forms. You will use a form 1040A to itemize deductions. Using Schedule A, you will enter the car you donated into the "Gifts for Charity" section.

The amount you will receive as an auto tax write off will depend on how the charity uses the car you have donated. If used for what the law sees as significant work, the donor will be able to claim the fair market value. If the auto is sold by the nonprofit, then the taxpayer can only deduct the amount that the nonprofit received for the sale of the car.