Donating an old car can provide you with a tax break while also helping out a deserving charity. Many charities don't even care if the car is running, simply because they will either part out or scrap the car to receive maximum value. There are a few important things to keep in mind as you prepare to donate to ensure that everything goes smoothly.
#1: Check the charity status.
This is only important if you want to write off your donation on your taxes. If you simply want to get rid of a car and help out a specific organization, this step isn't as important. For tax purposes, the charity must be a tax exempt charity in order for you to reap the tax benefits of your donation. Being a non-profit isn't enough in this case – it has to be a registered 501 C(3). Tax exempt status should be available either directly from the charity or you should be able to find the status published in their website or on a list of registered charities for your state.
#2: Register the donation.
One major error you want to avoid is leaving the car in your name after the donation. Any important paperwork, including old registration forms and insurance cards, should be removed from the vehicle. Also, remove your plates so you can return them to the Department of Motor Vehicles. Sign the title over the to charity before the vehicle is towed from your property, as well. In some states, you may also need to fill out a bill of sale/donation or register the transfer of ownership in person or online. This protects you in the event the car is returned to running condition and then involved in an accident – you don't want to still be the registered owner.
#3: Know the market value.
You can generally only deduct the fair market value of the car from your taxes. For a car that isn't running, that would usually mean the lowest value listed in a regional guide. The charity must provide you with a copy of their tax filing status to show they are a non-profit as well as a letter acknowledging the donation, and you must fill out IRS form 8283 with information from your car donation. There is an exception: some charities will send you a letter detailing how much the vehicle was sold for. This often occurs when the car is running or can be easily repaired. In this case, you cannot write off the fair market value as you are limited to the selling price.
For more help, contact a charity that accepts donations in your area.