That cheap used car you bought for your teen got them around your little town just fine. But now they need something you’re confident will go the distance before you drive them cross-country to set up their college dorm room in the fall.
Whatever reason you’re looking to unload an old car, donating it to charity can sometimes help you get more value than trading it in if you can take the charitable contribution deduction. And you get to support a worthy cause. Plus, charities haul your old car off for free — even if it no longer runs.
Most charities make it easy to donate in just a few simple steps. But if you want to maximize your tax deduction, things get more complicated. So follow these steps to ensure the charity gets the most value from your donation and you’re able to claim the deduction without any trouble with the IRS.
How to Donate a Used Car to Charity
Donating motor vehicles to a charity doesn’t have to be complicated. But there are occasions when you want to follow every detail to the letter, especially if the value of your contribution is over $500. Ensure the donation process goes smoothly by following the proper steps.
1. Research Charities
An internet search provides plenty of national and local charities that accept all kinds of vehicle donations. Alternatively, if you already have a charity in mind, call and ask if it has a car donation program. Or you can check out our list of the best places to donate your vehicle.
Aside from a few highly reputable exceptions like Donate A Car, avoid third-party auction houses that claim to resell your vehicle on behalf of a charity and donate the proceeds. It’s best to donate directly to charities, who work with their own vetted resellers.
Unfortunately, scammers abound in the car donation industry. They often take the form of an intermediary company that offers to arrange the sale and donate the proceeds. But they typically take a significant cut in the form of commissions and fees. That means very little ends up in the hands of the charity.
To maximize your contribution, ensure the charity you choose is:
- Reputable. Check with the Better Business Bureau, Charity Watch, or Charity Navigator to ensure the charity you’re considering is highly rated.
- Efficient. Although they incur some costs (such as towing fees), the best charities work with auction houses that deliver them at least 70% from the sale.
- Registered as a Nonprofit. If it doesn’t have 501(c)(3) nonprofit organization status with the IRS, it’s not a charity. And that means your donation won’t be tax-deductible. Use the tax-exempt organization search tool on the IRS website to find the charity you’re considering.
2. Research the Car’s Fair Market Value
The fair market value is the amount you could sell a vehicle for in its current condition. It represents the money you give up to donate.
While you’ll probably have to deduct the car’s sale price, certain circumstances could cause you to need to deduct the fair market value instead. So you need to know it just in case.
The IRS requires you to use a reputable pricing guide to determine the fair market value. For vehicles, these include the Kelley Blue Book, Edmunds, the Hearst Black Book, or the National Automobile Dealers Association.
3. Get an Appraisal (if You Need To)
If you know your chosen charity plans to (or could potentially) use your vehicle for internal use and it’s worth more than $5,000, you must get an independent appraisal.
The appraisal must be from a qualified appraiser and performed no more than 60 days before you donate the vehicle.
When searching for an appraiser, look for the following qualifications:
- Certification in Auto Appraisals. Ensure you hire an appraiser who has expertise in auto appraisal. One sure sign is credentials from an independent auto appraiser certification program.
- Membership in a Professional Appraisal Association. Professional appraisal associations typically require member certification. And members must follow standard appraisal regulations. Their websites, such as the American Society of Appraisers and the Bureau of Certified Auto Appraisers, also have handy search tools for finding appraisers in your area.
- Uses the Uniform Standards of Professional Appraisal Practice. The Uniform Standards of Professional Appraisal Practice are the quality-control standards for appraisals of personal property, including vehicles.
- Local. Your appraiser will need to personally inspect your car, which means visually examining its condition. So it’s best practice to hire locally.
Be aware that pricing can vary widely throughout the profession. An auto appraisal can cost anywhere from $100 to $750. Most appraisers charge a flat fee, although some charge by the hour.
You’re not required to get an appraisal if the charity sells it for cash.
4. Clean the Car
If you’re preparing your vehicle for an appraisal, ensure it looks its best. Like many things in life, first impressions matter. So get the car washed and waxed, and perform any routine maintenance like changing the oil and filters and topping off the car’s fluids.
Also, check to ensure the tires have the proper amount of air in them and everything on the car is working properly. A burned-out headlight bulb can detract from the car’s overall appraisal value.
If you’re not preparing for an appraisal, there’s no need to go to such lengths. However, ensure you don’t leave any belongings or identifying personal information in the car.
Search the glove compartment and under all the seats for any scraps of paper, receipts, or anything with identifying information, including the registration and warranty or service contract information. If you have a service contract, cancel it.
Once you’ve driven it for the last time, remove the vehicle’s license plates. Also remove any cellphone equipment, navigation devices that weren’t factory-installed, and your garage door opener.
5. Complete a Questionnaire
Most vehicle donation charities provide a questionnaire that asks donors for personal information, a description of the vehicle’s condition and location, and verification of the title.
Many of the larger charities, such as Habitat for Humanity, Make A Wish Foundation, the National Kidney Foundation, Goodwill, and the Salvation Army, have dedicated vehicle donation departments. Those departments often have their own websites, which typically have a FAQ (frequently asked questions) page and customer support.
Additionally, if you have any questions about what’s involved in the process, how to get a copy of your title if it’s missing, or how to claim the donation on your taxes, most charities with vehicle donation programs have customer support teams ready to answer your questions.
6. Drop Off the Car or Arrange for Pickup
Once you’re ready to donate, the next step is to make an appointment to deliver the car or have a representative from the charity come pick it up.
All reputable car donation charities offer free pickup. There should be absolutely no upfront charges for your donation — no towing, title, or paperwork fees of any kind. If the charity requests a fee for pickup, that’s a red flag it’s a scam.
But if your car is still drivable, consider dropping it off yourself. The charity deducts the cost of the tow from the ultimate sale price of your donated car, which means less money goes toward funding the charity’s programs (and maybe less of a deduction for you).
7. Transfer the Title
When you make a car donation, you must sign your title directly over to the charity to make it the new owner.
All states have clear regulations about the transfer of ownership of vehicles, and they vary from state to state. So it’s essential to check the laws governing title transfers where you live. Just search “[state name] car title transfer.”
But in general, to transfer your vehicle title, follow these steps:
- Ensure the Title Is Clear. Ensure there are no liens placed against the vehicle, as the DMV won’t transfer ownership if there are. The most common liens are for car loans. Other types of liens include mechanic’s and garagekeeper’s liens, which businesses place against vehicle titles for unpaid repairs or storage fees.
- Complete the Owner Section. To release a clean title, the donor first completes the section related to the owner or seller, usually on the back of the title. All those listed as owners must sign their names exactly as written on the title. Additionally, some states require notarized signatures to transfer vehicle titles. If that applies to your state, don’t sign the document until you’re in the presence of a notary.
- Complete the Transferee Section. Most states require you to identify a charity by name as the transferee on titles for vehicle donations. Some states only require the signature of a charity representative, while others require the notarized signature of an authorized officer of the charity.
- Make Copies. After you’ve completed the donor and charity sections, someone must submit the title and any state-specific documentation to the department of motor vehicles or equivalent office in that state. Charities generally do that part. To keep yourself legally covered, make copies of the front and back of your signed title.
Caution: A charity may ask you to leave the transferee section blank to avoid having to retitle the vehicle. If it does, find another charity.
If you leave this section blank, you remain liable for the vehicle. When the charity sells it at auction, if the new owner fails to register it, it’s still yours in the eyes of the law. You will be held responsible for any incurred parking tickets or crimes committed using it.
8. Notify Your State
State notification is a way for the state to create an official record that you’re no longer in possession of the automobile. It releases you from liability over the vehicle, registration fees, and having to keep it insured.
The steps you need to take vary by state. Some states require you to remove and submit the license plates to a local motor vehicle division. Other states require a release of liability form or other special paperwork.
Research the rules in your state so you know what to do before turning over your vehicle. If you have questions about what’s required in your state, most charities with vehicle donation programs have representatives who can answer your questions.
Additionally, you can visit the state notification information page at CARS (Charitable Adult Rides & Services) and click on your state.
9. Get the Paperwork
Immediately after you drop off your vehicle or a representative picks it up, ask for a temporary receipt of donation. The representative should have boilerplate receipts or acknowledgment of donation forms they can fill out with the relevant information.
Then ensure an official receipt will be on its way in the mail within a reasonable time frame.
Once you’ve donated the vehicle, the charity begins using it, selling it for scrap metal, or sending it to auction. If the charity uses the car or sells it at a discount to an individual in need, you need the original proof of donation receipt to deduct the car’s fair market value.
If the charity sells the vehicle at auction, you will get a second receipt disclosing its sale price. Charities are legally required to provide this tax receipt within 30 days of selling the car. The IRS allows you to deduct the vehicle’s sale price during the year you receive the tax receipt.
Note that a charity has up to three years to sell your car. So if the charity plans to sell rather than use it, you must wait for the sale before deducting the charitable donation from your taxes.
Additionally, whether the charity sells or uses it, if the value of your vehicle is more than $500, the IRS requires the charity to report the donation by completing a Form 1098-C or written acknowledgment, which must include:
- The name, address, phone number, and taxpayer identification number for the recipient charity
- Your name, address, and taxpayer identification number
- The date of the donation
- The mileage, make, and model of the vehicle
- The vehicle identification number for a car or truck, hull ID for a boat, or aircraft ID for an airplane
- The amount of the donation or proceeds of the sale
- Whether the charity made any material improvements to the vehicle
- Whether the charity gave you any material goods or services in exchange for the vehicle
Form 1098-C includes three copies: A, B, and C. The charity files Copy A with the IRS and sends you Copies B and C. You then file Copy B with your tax return if you want to claim a deduction of more than $500 and keep Copy C for your records.
Noncash donations are the most common triggers for IRS audits, so be careful to cover all your bases. Specifically, the IRS warns that without the 1098-C or written acknowledgment, your deduction can’t exceed $500.
See IRS Publication 4303, a Donor’s Guide to Vehicle Donation, for more specific guidelines.
10. Claim Tax Deductions on Your Tax Return
To take a tax deduction for your vehicle donation, you have to itemize deductions on your return. But to benefit from itemizing, all your deductions for the year must exceed the amount allowable for the standard deduction — because you can’t do both.
Thus, most people are better off claiming the standard deduction since it’s typically much higher than what the average taxpayer can itemize.
For example, for the tax year 2022, the standard deductions are:
- $12,950 for single individuals and married individuals filing separately
- $19,400 for heads of households
- $25,900 for married couples filing jointly
To find out which is suitable for you, see our article on standard versus itemized deductions.
If you itemize, the IRS has detailed rules about how much you can claim and which forms you need to fill out.
The IRS allows you to deduct up to the fair market value under certain conditions. These include:
- If the charity intentionally sells the car at a significant discount to an individual with a low income
- If the charity keeps the vehicle for its own use
- If the charity makes substantial improvements to your vehicle before selling it (in this case, you’re limited to deducting only the fair market value)
Additionally, if your car sells for less than $500, you can deduct either $500 or the fair market value — whichever is lower. For example, if your vehicle sells for $350, but its value is $650, you can deduct $500.
A donated vehicle rarely meets one of the criteria necessary to deduct the fair market value. Unless your car is in excellent condition, the charity will most likely sell it at auction or to an auto salvage yard. So most of the time, you only need to know the sale price.
For example, if the charity sells the car at auction for $2,000, even if the car’s fair market value is $3,000, you can only deduct $2,000.
You may not receive sale price information in the tax year you donate the vehicle because a charity has up to three years to sell your car.
To claim the deduction on your tax return, start by filling out a Schedule A. Follow the instructions on the IRS website. You may need to complete additional forms, depending on the amount of your deduction.
- Less Than $500. You don’t need to fill out any additional forms, but hang onto any proof-of-donation or proof-of-sale receipts you received from the charity.
- Between $501 and $5,000. Complete Section A of IRS Form 8283 and file it with your 1098-C and return.
- Over $5,000. Complete Section A and Section B of Form 8283 and obtain an acknowledgment signature from an authorized representative of the charity before filing the form with your income tax return and your 1098-C.
Vehicle Donation FAQs
Most charities handle the complex steps of vehicle donation for you. But if you still have questions about how to donate a car to charity, these frequently asked questions can help.
What Types of Vehicles Can I Donate?
Typically, charities with car donation programs accept a wide variety of vehicles — everything from snowmobiles, ATVs, RVs, and boats to airplanes. Some charities even accept farm equipment, construction equipment, and nonautomotive vehicles like trailers.
So if it falls under the umbrella of “vehicle,” chances are your chosen charity’s vehicle donation program will gladly accept it.
Can I Donate a Vehicle if I Don’t Have a Title or It’s Not in My Name?
No, you need the title to transfer ownership to the charity. If you’ve lost the title, most charities can assist you in obtaining a new one.
Also, you cannot transfer ownership of a vehicle you don’t legally own yourself. So if you’ve come into possession of a car that’s not titled in your name, such as through inheritance, you must first retitle it before you can donate it.
Can I Donate a Vehicle That Doesn’t Run?
Charitable car donation programs take vehicles in any condition, including nonworking vehicles.
Cars in working condition earn the most cash for charities since the organization can resell them at auction. However, charities can recycle non-running vehicles for scrap metal or parts. While this isn’t as lucrative, it can still earn charities a few hundred dollars.
How Long Does the Car Donation Process Take?
Typically, the donation process can happen in as few as 24 to 72 hours. Once you complete the online form on a charity’s car donation webpage, a representative will contact you to arrange a drop-off or free pickup of your vehicle within one to three business days.
However, it can take longer to receive your tax paperwork. You’ll get a receipt of donation or a thank-you letter from the charity immediately after you donate. But you may not receive your form 1098-C or written acknowledgment detailing the sale price until two weeks to 30 days after the sale.
While charities have up to three years to sell your car and send you the paperwork that lets you take your tax deduction, they rarely hang onto it that long. Most charities put cars up for auction or recycling immediately since it means cash in hand.
How Much Can I Write Off for Donating My Car?
You can deduct whatever amount the vehicle sells for or, under certain conditions, its fair market value. So, if your car sells at auction for $10,000, you can deduct a charitable contribution of $10,000. The only limit is the sale price.
However, if the charity keeps the car for its own use or sells it significantly below fair market value to an individual in need, you can deduct the fair market value. You can also deduct the fair market value, up to $500, if your car sells for less than $500.
Note that you cannot automatically claim the highest listed value for your vehicle’s make, model, and year. You must be honest about its condition and the value of the car.
Also, if the charity makes substantial improvements to your vehicle before selling it, you cannot deduct the sale price. You must deduct the vehicle’s fair market value at the time of donation, before the charity made the improvements.
Whether or not you qualify for a tax deduction from your vehicle donation, there are still benefits to donating to charity. If your used car is no longer drivable or you aren’t looking to buy a new one, it’s a convenient way to clear your driveway while helping individuals in need.
If you’re up for more work, another option is to sell the car yourself and donate the money. In many cases, you can get more for the vehicle in a private sale than the charity could fetch at auction. You can then take the proceeds and donate the cash. It’s one way to maximize your tax benefits.