One way of getting rid of an old car is to donate it to a local charity. Some well-known places that accept cars as donations are the Salvation Army, Goodwill and Trees for the Future. However, this list is in no way exhaustive so always check with your local charities, however big or small.
Once donated to charity, cars are treated one of two ways:
1) Charities can sell the cars for whatever monetary value they can get. It this case, they can sell them to a dealership or opt to for direct sale to prospective buyers.
2) The charity also has the option of keeping them. These cars are then used to transport persons or equipments. In the event that the charity promises not to sell the car, it is required that this intent be disclosed to the donor (you).
How car donations affect you:
Car donations count as non-monetary donations which are tax deductible. It is important for persons to realize that cars being donated must be valued and it is the car owner’s responsibility to get the valuation done. Once the value of the car is determined, the corresponding IRS forms must be accurately filled out when filing your tax returns.
Non-monetary donations can often come under scrutiny so keep an accurate filing system. Your file should include receipts for purchases or repairs made on the car, photographs of the car, a copy of the selected charity’s letter of determination received from the IRS to verify that they do qualify for a tax emption, written proof of the donation from the charity and a copy of your valuation report.
1) Once a car donation is made, an IRS Form 8283 form must be included in your tax return application. Speak with you location tax department for clear instructions on which sections to complete and why.
2) You may receive a range for the value of your car. Be careful not to simply award the highest possible value since this may result in fees and penalties if the value you document is wrong, especially if there is a big difference between the awarded value and the actual value.
3) Always remember that there are many penalties that can be incurred for attempts to mislead or defraud the IRS even if there is no direct intent. Check with your state department for necessary regulations to ensure that the transaction is completely legal.