-
Step 1
Find a charity to donate your car to. This could be as easy as checking your mailbox for a brochure, especially if it's around tax time. Charities also advertise for car donations on the radio fairly often. Some nationally charities you can contact that all accept cars are the Ronald McDonald House, Purple Heart, the Salvation Army and the American Red Cross. See the resources section to find your local chapter.
-
Step 2
Call the charity and ask a representative how it plans to use your car. Some organizations simply sell the cars for scrap, while others use them as part of their work. According to IRS rules, you can only deduct $500 or the selling price, whichever is greater, unless the charity keeps the car "as part of its mission." This means that it will use the car for official transportation or perhaps give it in kind to someone who can't afford a vehicle. If this is the case, you can deduct fair market value. In either case, the charity has to be a registered 501(c)(3) nonprofit.
-
Step 3
Go to the Department of Motor Vehicles and request to have your title transferred over to the charity. Cancel your registration and insurance on the car and return your license plates. If you decide to skip this step, you could be held liable for red-light camera and parking tickets even if you haven't seen your car in years.
-
Step 4
Have the car towed to the charity if no one offers to pick it up. Now that the car is no longer registered in your name it's not a good idea for you to drive it over. Once you get to the charity, fill out the required paperwork. Then hand over your keys. Ask the charity for a receipt in case you get audited.
-
Step 5
Report the deduction amount on your tax return using the criteria in step 2.
