Hassle-Free-Car-DonationThe benefits of donating an unwanted vehicle to charity are multifold. Your generosity will benefit others in your community or beyond, and you are freed from the burdens of storing and maintaining an unwanted vehicle. The benefits are even greater if your car is not in working condition, as the costs of repairing a vehicle can skyrocket. When you donate a car, you can look forward to receiving a fair-market tax deduction for its value.

Nonprofits benefit from your donated vehicle because they receive a cash donation that can be used for funding their programs. You can benefit by avoiding the hassle and costs associated with selling your car. If you sell your car, you’ll have to spend money on repairing it, getting it market-ready and on advertising. Selling a car is time-consuming, and you’ll still be required to pay for insurance and registration during the time you wait for a buyer. When you face the prospect of selling your car, you may realize the difficulty and ask, “should I donate my car?

You can also feel good about donating because your act supports positive charitable activities. The financial advantages that come with donation also make it an attractive option. However, car donation can become complicated if you don’t follow these four steps to keep the process simple.

1. Find a Reputable Charity

When you’re ready to donate your car, you can choose a nonprofit charity that you feel the most comfortable with. Use a well-established information source such as Charity Navigator, a website that catalogs information about nonprofits and verifies their status. It’s important for your tax write-off purposes to verify the recipient of your donation is officially designated as a nonprofit. You can find a charity in your local community that supports a cause you believe in, or you can choose a larger, national charity. Research charities to connect with one that aligns with your values or your community’s needs.

2. Decide Your Donation Timeline

If your car hasn’t been used in years, it will be easy for you to decide when to donate, as you are probably eager to get rid of it. Most charities will take your car whether it is in running condition or not. Often, you may donate your vehicle without needing updated smog certificates or safety inspections. If you are planning to purchase a new vehicle and donate your previous one, make a calendar for your donation process. It can be a fairly quick process from the time you make the first call to a charity to the time your car can be dropped off or picked up by the organization. If your car is scheduled for a pickup, it will be done by a licensed tow company at a predetermined date. At the time you schedule your pickup, complete all the documentation related to your car.

3. Be Smart About Taxes

The amount you can expect to receive as a tax write-off is the actual sale price of your vehicle. For further information about tax write-offs for donated vehicles, refer to IRS Publication 526. This document details the official process for determining a vehicle’s value. When your car is donated or picked up, you will receive a receipt. Please note this is not your final receipt for tax purposes, unless the value of your vehicle is under $500. If your vehicle sells for under $500, this receipt will be the only receipt.

As long as the fair market value of your vehicle is over $500, an IRS Form 1098-C will be mailed to you. This is an essential document verifying your charitable contribution for tax purposes. Keep it in a safe spot. As long as your donation is thoroughly documented, you should have no problems when tax time arrives.

4. Keep a Paper Trail

Although the donation process is fairly simple, dot your I's and cross your T’s. Keep a file with the paperwork related to your donation and keep an extra copy of it somewhere as well. When it’s time for taxes, you’ll need to be organized to ensure you receive the write-off for your donation.

About the Author: Helen Martin is a financial planner and consultant for nonprofit development. Her articles about charitable giving have appeared in several financial publications.