There are frequent advertisements asking philanthropic individuals to donate unwanted cars to charity, as well as numerous ways to donate a car via the Internet. However, a straight automobile donation might not be the best bet for you or the charity. Here’s how to donate a car in California, as well as alternative methods for contributing the value of your automobile to charity.
Review IRS Publication 561: Determining the Value of Donated Property. This explains the federal tax benefits of donating a car. Know that for donations with a value of $500 or more, you must file Form 8283 with your tax return. Remember, you can only claim the deduction if you itemize your deductions. The tax benefit will reduce your taxable income, which is not the same as the amount you owe the IRS.
Make sure you have the title of the car. You will need to hand it over when your transfer the car.
Find an organization in California that you feel a connection with and find out if they accept car donations. Most organizations do. Many national organizations also will accept a car donation with pickup in California.
Verify that the organization you will donate your car to is an 501(c)(3) organization. You can verify this information with the IRS. Also, check the organization out with the Better Business Bureau.
Find out if the organization you are handing the car over to is the actual charity or a broker. Brokers liquidate the car and give a portion to the charity. If you respond to a car-donation advertisement or do blanket Internet searches, you will likely connect with a broker who will take a hefty chunk of the proceeds, leaving the charity with relatively little. On the other hand, these brokers often cover the towing and take cars that are not running.
Make sure to get a tax receipt so you can claim your tax deduction with the IRS at year-end. Remember to file Form 8283.
Send in a declaration of non-responsibility to the California Department of Motor Vehicles. Cancel your automobile insurance for the car.
Consider selling the car yourself and donating the proceeds to the charity. See Resources for an interesting perspective on this.