The steps you’ll have to take to make a tax-deductible car donation may depend on the jurisdiction in which you live. Often, the first step involves learning your jurisdiction's laws regarding car donations and finding an organization that qualifies as a charity or is legally eligible to receive tax-deductible donations. Then, you will usually have to determine the market value of your car and obtain a detailed receipt from the organization that receives your tax-deductible car donation.
The first step you may take in donating your car may be researching tax-deductible car donation laws in your area, as such laws often differ from jurisdiction to jurisdiction. You’ll need to know which sorts of organizations accept tax-deductible donations and how to proceed with the donation. You’ll also want to know how much of a tax deduction you will receive and how you’ll need to document the donation.
Depending on the laws in your jurisdiction, you may need to find a particular type of organization to which to donate your car. For example, you may have to find an organization that is legally considered a charity or a religious organization that can legally accept tax-deductible donations. Often, you can determine whether or not an organization will qualify by calling the organization in which you are interested and asking for information about donating your car.
You will likely have to determine the current value of your car as part of the tax-deductible car donation process. In most cases, you will not be able to deduct the amount of money you paid for the car. Instead, you must determine its fair market value by checking in books that provide vehicle value amounts for different makes and models of cars. You may also check with your jurisdiction's taxing agency to learn the requirements it sets for calculating a car’s value. In some cases, you may also have to seek an appraisal for your car if its value exceeds a specific threshold amount set by your tax agency.
One of the most important things to remember when you want to make a tax-deductible car donation is that you have to obtain a receipt. If you do not obtain a receipt, you may have trouble proving you donated the car and are eligible for a tax deduction. The receipt should include the receiver's name and contact information, your name and contact information, and a description of the vehicle you have donated, including its value. Depending on where you are located, you may also need to have the charity’s tax identification number listed on the receipt.
