There are two main benefits to donating your vehicle. First, the charity benefits from a very useful donation. Second, you have meaningfully affected someone else's life along with a healthy tax deduction. But there are a few things you need to know before you donate your car.
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Not all charities will get you a tax deduction. Make sure it is government approved. This means it can either be registered as a 501(c)(3) or a qualified church. This is the only way you will get a tax deduction!
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You need to know the market value of your car. Most dealerships that sell/buy cars use the Kelley Blue Book, so use that to determine the market value.
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Cars worth more than $5,000 require a professional certified in vehicles to appraise it. This will be necessary for government questions.
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You need a receipt from your chosen charity. This receipt needs the name of the charity on it, as well as the date of the donation, a tax ID number, and all relevant information about the vehicle.
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The value of you car is not the tax write-off you receive. Mostly likely your donated vehicle will be sold to someone needing a way to get to and from work. Find out what they charity sells it for, and this will be the price you receive for your tax deduction.
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The DMV and your insurance company need to know about your donation. They will help you with any other necessary steps, such as disposing of the license plate.
Again, you won't be getting the cash you would from flat-out selling your car, but you will have helped someone who needed it and saved yourself the trouble of selling it.
Information taken from: Peter Wallander. Car Donation Maryland. www.officialautodonation.com
Lauren White