7 Things To Know About Auto Donation

An auto donation gives you an easy way to get off your unused car. It also allows you to support your favorite cause and receive benefits through tax deductions. While donating your car is beneficial, you need to be well informed on how to make your donation impactful and trouble-free. Here are seven things you need to know before donating your car:

1. Choosing a Reputable Charity

Before donating your car, understand the charity you intend to donate to and what use they will make of it. Research the charity’s legitimacy and reputation to make sure you are donating to a reputable non-profit organization. Look for a charity with a long history of running programs that positively impact the community. The charity of your choice should also be recognized by the IRS as a tax-exempt organization. Donating to such a charity will qualify you to receive tax deductions from your car donation.

2. Preparing Your Vehicle for Donation

Before donating the vehicle, remove all personal items, clean it, and remove the license plate. Gather all the car documents, including the registration and title. These documents will help you and the charity complete the donation paperwork correctly and quickly.

3. Tax Benefits and Implications

An auto donation to a charity can be tax-deductible if you itemize your taxes. To benefit from these deductions, you must donate your car to a charitable organization registered under the 501(c)(3) category. Donating to a tax-exempt religious organization can also qualify you to claim a tax deduction for your donation.

While donating your car, the charity should supply you with some documents detailing all the transactions of the donations.  These documents will help the IRS process the tax deductions from your charitable donation. The charity should give you a written receipt acknowledging your car donation. Receipts should also be accompanied by a written acknowledgment or Form 1098-C. The written acknowledgment should indicate the car’s fair market value and that you freely donated it. If the value of your car is above $500, you will need to declare its value on IRS Form 8283. These documents contain information that you need when filing your taxes and serve as proof that you qualify for tax deductions.

4. Required Paperwork

To avoid liability after the donation, you must fill out transfer documents, such as the release of liability form. Completing the donation paperwork proves that you have formally transferred the car’s ownership to the charity. You will also need to sign the car’s title over to the charity. Fill in your name, the charity’s name, and the car’s odometer reading on the title and sign. On the sales price section of the title, indicate that the vehicle is a charitable gift.

5. Title Requirements

Charities accept car donations from owners who have clear, lien-free titles. The title serves as the legal proof that you are the actual owner of the vehicle. You will be required to sign and hand over the title to the charity after the car is delivered to the charity. The charity will then complete the donation by signing the title against their name and address. By signing the title, the charity formally assumes car ownership and releases you from liability.

6. Free Towing Services

While many charities will tow the donated car to their premises free of charge, others may not. If your charity lacks a free means of transportation, you can hire a local hauler to pick up the car. Choose a hauler that charges an affordable fee to minimize the cost. Always take advantage of free services by choosing a charity that offers free pick-up or drop-off.

7. Notifying the DMV and Insurance Company

Notify the Department of Motor Vehicles about the transfer of ownership after completing the donation process. This will help the DMV to legally release you from all liabilities associated with the car. Notify your insurance company that you have given your car to charity. This will facilitate the termination of your insurance contract and stop future premium deductions related to the vehicle.

Make Your Auto Donation to Charity Today

Donating your car to a charity will help support productive charities that address societal issues you’re interested in. Being well-informed about the donation process will help you follow the proper steps to avoid legal issues in the future. Contact a trusted charity today and learn how you can donate your car.

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