Donating a Car

Tax Deductions with Qualified Charities

According to the Internal Revenue Service (IRS), your vehicle donation is tax-deductible when you donate to a "qualified charity." If the IRS recognizes a charity as being qualified, that charity can receive tax-deductible donations.

The IRS makes it easy to find qualified charities. Simply:

• Download a copy of the electronic version of Publication 78.

• Perform a search using the online version of Publication 78.

• Check out the kinds of charities included in Eligible Donees Generally Not Listed in Publication 78.

If you need further assistance, visit IRS Web site or call them at (800) 829-3676.

Explore Your Charity

Just because the IRS considers a charity qualified doesn't necessarily mean you want to donate your vehicle to it. Use the following to research your charity of choice as well as the donation process:

• The National Association of State Charity Officials (NASCO).

• Maine's Department of Professional and Financial Regulation's Office of Licensing & Registration―especially Ten Tips For Making Smart Donations.

• The Office of the Maine Attorney General.

Tax-Deductible Donations: What You Need To Know

Choosing a qualified charity is just the first step to making a tax-deductible vehicle donation.

IRS Publication 4303, A Donor's Guide to Car Donation, thoroughly details the donation process, but below DMV.ORG has outlined a few crucial elements that pertain to everyone.

Understanding Fair Market Value

When it comes to tax-deductible vehicle donations, you can only deduct your vehicle's fair market value.

It may seem confusing, but fair market value is not the same as the Kelley Blue Book value. The good news is that IRS Publication 561, Determining the Value of Donated Property, helps you figure out your vehicle's fair market value and determine how much you can actually deduct.

Recognize Your Limitations

The IRS has several limitations in place regarding tax deductions. You'll find detailed explanations in Publication 526, Charitable Contributions.

Gather Your Paperwork Now

There's plenty of paperwork to deal with once tax season rolls around―even for those who file their taxes electronically. For example, most folks who've donated vehicles throughout the year need:

• A written appraisal of the vehicle from a qualified appraiser.

• Written acknowledgment of the donation from the charity.

• A completed copy of Form 8283 Noncash Charitable Contributions.

Check out IRS Publication 4303 now so you'll be prepared in April.

Notify the Maine Bureau of Motor Vehicles

Once you donate your vehicle to a charity, you must properly handle the vehicle's title and registration. This notifies the Maine BMV that you no longer own the vehicle.

Title

When you donate your vehicle to a charity, you'll follow the same simple process as if you were gifting the vehicle; however, you must also write a bill of sale for records.

Registration

There are two ways you can handle your license plate:

1. If you want to use the license plate on another vehicle, keep it, transfer it, and take advantage of the remaining registration time left on it. Remember to notify your motor vehicle branch office.
2. If you don't plan to transfer the license plate, return it to your local motor vehicle branch office.