Car Donation Tax Deduction
The tax deduction you can get from donating your vehicle is the same for each state. What is different, however, is each state’s way of verifying eligible charities.
What most people don’t realize, however, is that even some otherwise well-meaning car donation charities are not operating legally. Meaning that they have failed to register with the state that they are operating in.
…Usually this comes down to merely neglecting to pay an annual fee to the State Attorney General’s Office – a fee that often varies with the amount of money the charity typically gets each year.
So you should use ‘due diligence’ in checking out any charity before donating your car or other vehicle to them.
If the charity is not appropriately registered is a fraudulently operating charity – you will not be able to claim your car donation tax deduction. Not to mention your donation will not provide any benefit to someone or some family less fortunate than yourself. (More on how to avoid car donation scams is below.)
There is a difference between a charitable organization (such as the “Kars4Kids”) and a professional solicitor who works for Kars4Kids:
…A solicitor is considered “professional” if he/she – or the immediate solicitation organization they work for – makes a profit either finding leads for the charity or taking the charitable donations themselves and giving a percentage to the charity, keeping the rest as their profit.
The actual “charity” in the above example would be “Kars4Kids,” but the solicitor may deliberately make you think that they ARE Kars4Kids, and may even have a legal business name like ‘Cars4Kids’ in order to fool you (remember – this is just an example).
Not that these organizations are necessarily bad – this is how many charities get their donations – with the help of professional solicitors.
…But it’s important to check out the so-called “charity” before handing over your donation. because some may give only a tiny percentage of each donation to the charity.
…And then there’s the ‘bogus’ charities – which are complete frauds – but that’s discussed later on this page.
Is the Car Donation Charity Registered With the IRS?
IRS Publication 78 – Is a list of charities eligible for you to be able to get a tax deduction.
The IRS makes the rules about car donation tax deductions. Here is IRS Publication 4302, A Charity’s Guide to Vehicle Donation. In it, the IRS outlines the types of vehicle donation programs and their effect on tax-exempt status, taxable income, and deductible contributions.
An IRS companion guide – IRS Publication 4303, A Donor’s Guide to Vehicle Donation – provides guidelines for people who donate their used vehicles to charities.
State Law Requirements About the Vehicle Title
In general, state charity officials recommend that the donor take care of transferring the title of the donated vehicle (in order to release liability of the vehicle). This usually involves simply filling out a form with the local DMV (normally known as the Division of Motor Vehicles or Department of Motor Vehicles) which states the vehicle has been donated to a charity.
Also, the donor should remove the license plates before transferring the vehicle to the charity. (At the time of this article, however, two states – California and Minnesota – do things different: California DMV requires you to leave the plates on the donated vehicle, while Minnesota makes it optional.)
Assistance Through State Officials
Many of the state charity officials will provide useful information about charities and fundraisers on local state websites, including brochures and publications.
A listing of each state’s official charity regulations at each state’s Attorney General Office is available at:
The National Association of State Charity Officials
* Be advised that most states caution that registration with that state’s Attorney General’s office or Secretary of State does not mean that the state endorses the charity (or solicitation service for a charity).*
Beware of Car Donation Scams!
Many car donation scammers are out there – in EVERY state. They may seem legit on the surface – often professional-sounding with supposedly good credentials, maybe a nice-looking website. But if they are indeed legit, they will be registered with one or more of the following organizations:
1. The State’s Attorney General’s Office. Most States require that any organization that solicits donations must register with the state’s Attorney General’s Office.
2. The state’s Secretary of State. Other states require that charity solicitation organizations register here.
But not every state has this requirement. So…
If the Attorney General’s Office or Secretary of State of a particular state does not require car donation charities to register with them,
…or if the car donation charity you are checking into is not registered with the Attorney General’s Office or Secretary of State – even though it is supposed to be for that state…
…check to see if it is listed in good standing with one or more of the following ‘charity watchdog’ organizations.
Charity Watchdog Organizations
3. Charity Navigator – http://www.charitynavigator.org/
4. Better Business Bureau Charities – http://www.bbb.org/us/charity/
5. GuideStar Charity Check – http://www2.guidestar.org/
6. Charity Watch – http://www.charitywatch.org/
…If the car donation charity is not registered or listed in good standing with any of the above organizations, it is likely a fraudulent operation. Regardless, at this point you should report them to the State’s Attorney General’s Office as soon as possible. Let them figure it out from there.