Donating a Car

Choosing a Worthy Charity

Rhode Island residents who wish to donate their unwanted vehicles to charity have many different options. Whether you're interested in education, healthcare, or the environment, there's a charity available that can benefit from your donation. Examples of charities that accept vehicle donations include:

• US Doctors for Africa

• Angelcare Children's International

• The Breast Cancer Fund

• Glaucoma Research Foundation

• Mercy for Animals

• Outreach Center for Children

• National Eating Disorders Association

Do Your Homework

If you decide to donate your vehicle to a charity you haven't worked with in the past, however, do your homework. Spend some time reviewing the charity's Web site and informational literature to get a feel for whether or not the group's mission is a good match with your personal priorities. You may also want to investigate the charity by using sites such as GuideStar and Charity Navigator to research the group's outside reputation and financial health.

Eligible for a Deduction

If you haven't selected a charity yet, you can also review IRS Publication 78: Cumulative List of Organizations to find one. Remember that religious organizations won't be included in here, although they do qualify. Contact the IRS Customer Account Services division for Tax Exempt and Government Entities at (877) 829-5500 if you have questions.

Making It Legal

In most cases, the charity you've selected to receive your vehicle donation will help you process the necessary paperwork. However, you will need to first make sure you have a valid title. If you have lost or damaged your vehicle title, you must first apply for a replacement before you will be able to assign ownership of the vehicle to the charity during the title transfer process. For more information regarding vehicle titles and transferring ownership of your vehicle, call the Rhode Island Department of Motor Vehicles (DMV) at (401) 588-3018.

Cancel Your Registration

If you are donating your vehicle to charity and not replacing it with another vehicle, cancel your registration and license plates. Bring your registration card and plates to the nearest DMV office and sign a cancellation form.

Saving Money on Your Taxes

The law allows you to claim a deduction based on the fair market value of the donated vehicle, if the charity you've selected is classified as a section 501(c)(3) organization.

There are several factors to keep in mind if you are planning to claim this deduction. For example:

• You must itemize deductions on Schedule A of Form 1040 in order to receive the full benefit of a vehicle donation deduction.

• The Kelley Blue Book value of your car is not always the value of your deduction. For detailed information regarding how deduction amounts are calculated, see IRS Publication 561: Determining the Value of Donated Property.

• Ask for a receipt if the value of your donation is more than $250. You won't need it to file your return, but you may be asked to produce it to document the deduction in the event of an audit.

For more advice on the potential tax consequences of a vehicle donation, it's best to contact an experienced accountant in your area.