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Donating a Car to Charity

Last updated 25th Nov 2022

It's becoming increasingly popular for many Americans to donate a car; especially right after buying a new vehicle. Unless the older car is being given to a family member or friend, there are a limited number of options the owner has including trading the vehicle in, selling it, or donating it to a charity such as the Salvation Army.

How Can I Donate My Car?

When buying a new car, there are a couple of ways to dispose of the old one. For example, it's possible to:

  • Trade in the Car: in all likelihood, trading-in an automobile is the easiest way to get rid of a used car. It is coordinated with the delivery of the new car, and the deal can be folded into the one negotiated with the dealership.
  • Sell the Car: it's also possible to sell a used car through the classified section of a local paper, or online with an auction website such as eBay. Admittedly, selling the car can be a hassle, and even put someone's personal safety at risk.
  • Give the Car Away: if the owner knows someone that needs a car, and they're willing to give it away, this is a generous option.
  • Donate the Car: finally, the used car can be donated to a worthy cause, which is also a generous option.

Selling versus Donating a Car

Many consumers are starting to shy away from selling their cars themselves. There are several kinds of risks taken when selling a car over the Internet or through the newspaper. One risk has to do with personal safety. There are many thieves and creeps in the world that might seize this opportunity to steal a car and perhaps hurt the owner in the process. The second risk is the car might be damaged by a potential buyer.

The final risk has to do with getting paid for the car. It's important to get paid, meaning cash in the bank, before signing the car's title over to the buyer. Once it's signed, it will be extremely hard to get paid if a personal check bounces or the cashier's check has a typo on it.

Donating a Car

At this point, we're going to walk through a process that describes how to donate a used car to charity. Realistically, there are two good reasons to donate a car. The first is that the owner gets a good feeling inside knowing they've helped others that are less fortunate. The second reason comes from a tax break that occurs when donating a car to a charity, not-for-profit, or nonprofit organization.

IRS Rules

The Internal Revenue Service sets the rules for how much a taxpayer can claim on their income taxes if they've donated a car. Advertisements on the radio make it sound like it's possible to deduct the full value of the car, which means the one found in a blue book. While a book outlining the value of used cars might be a good starting point, it is not always the value a taxpayer can claim as a deduction.

In fact, the IRS has three rules when it comes to donating a car to charity:

  1. The first rule is that the company must be a 501 (c) (3) charity or a not-for-profit organization. The charity itself should be able to supply the owner with proof of this status, or it's possible to contact the IRS at their toll free telephone number 1-877-829-5500.
  2. The second rule has to do with being able to itemize deductions for tax purposes. The car donation line item would appear on Schedule A of the owner's tax forms. It may not be possible to get the full tax benefit if a standard deduction is taken.
  3. The final rule has to do with determining the value of a car being donated. The rule is very straightforward: Taxpayers can deduct the fair market value of the car, which is the price a willing buyer would pay, and a willing seller would accept. This value can be very different than the car's blue book value. The IRS provides guidance on how to determine the value of a donated car.


When donating a car to a charity such as the Salvation Army, which has their own process for this type of transaction, make sure the correct paperwork is retained for tax records. At a minimum, this includes name and address of the charity or nonprofit organization.

Taxpayers also need a description of the car (make, model, mileage, and year), the date, and location of the donation. A written acknowledgement for the car's donation such as a receipt or similar document should also be retained. Taking pictures of the car can also help provide a record of the car's condition.

If the car is valued at more than $500, the owner will also need to fill out tax form 8283. If the car is valued at more than $5,000, a written professional appraisal is needed. This must be completed not more than 60 days prior to donating the car to a charity.

About the Author - Donating a Car to Charity

Moneyzine Editor

Moneyzine Editor