Donating Cars

Donating Cars: What To Do and What Not To Do

Updated September 11, 2013

You’ve been saving money like crazy, and (finally!) you just bought a great new car. You got a fair deal on it, and just mounted your plates. The car is shiny, runs smoothly, has all new tires, has a working horn, and doesn’t smell like old fast food.

Unlike your old car, that is now just sitting in a spot collecting dust.

Instead of going through the hassle of selling your old car, through advertising, having strange people visit your home to look at it, and eventually giving up and selling it to a dealer for an absurdly small amount of money, donate it! The process of donation is fairly straightforward: Simply call the charity you wish to donate it to, arrange a pickup or drop off day, and sign it over. It’s that easy.

There are a few things you should know before you donate your car. Here are a few things to do, and a few things not to do when going through the process.

Do your homework. The IRS has specific regulations for vehicle donations. The donor (you) is eligible to deduct the fair market value of the vehicle up to $500, or the amount the vehicle sells for at an auction, whichever is greater. Make sure you read the IRS Publication 561, so you know all the stipulations.

Federal tax law stipulates certain eligibility requirements for tax deductions. You should consult your tax preparer or the IRS to make sure you are up to date on all the regulations.

Do keep a paper trail. You’ll need proof of the donation, and by keeping track of everything, you can ensure you get the biggest tax deduction while the charity gets the most benefit. The IRS Publication 561 states that the taxpayer is limited to the gross proceeds from the sale if the claimed value of the vehicle exceeds $500.

Don’t forget to file a tax deduction! One of the best things about making a car donation is that, oftentimes, it is tax deductible. You can save money by doing this. You should get a donation receipt as proof you donated your vehicle.

After the car is sold at auction, you should receive a letter notifying you of the final selling price. If your vehicle was sold for more than $500, you will be eligible to take a deduction of the fair market value of the car up to $500 without further documentation.

Getting rid of your old car doesn’t have to be a chore; donating it is a much easier option than selling. These little tips will help you donate your car properly, so that both you and the charity reap the maximum benefits.


Donating Cars


Sara Stricker has written dozens of articles, and bounces from topic to topic as the day goes by.



Calvin Escobar
About Calvin Escobar

The Car scene is so diverse Where I come from, most enthusiasts recognize the amazing engineering (particularly the engines). The bulk of the ridicule originates from the manner in which many of the vehicles are modded/maintained. Thus, the jokes and or hate tends to be aimed more at the owner rather than the machine. All of which makes seeing properly sorted old Toyota's and Hondas at car meets, auto shows, and track days all the more refreshing.

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