Five Risks of Car Donation


If you want to get rid of your old car, then donating it to a non-profit charity is your best option. This way, you’ll not only save yourself from all the hassles of selling the car but you’ll also get a tax benefit for your donation.

But car donation also comes with a certain risk. If you don’t stay careful then your mistakes with the donation will come back to haunt you. So, to make sure that doesn’t happen and avoid them, you need to know about the biggest blunders people do while donating their cars.
In this article, you’re going to know about five big mistakes people make while donating their car.

So, without further ado, let’s dig in…

1. Donating Your Car to A Wrong Charity

If you want to donate your car to get tax benefits, make sure you donate it to the right charity. You can only get tax benefits if you donate it to a non-profit organization with 501©(3) status approved by the IRS.

So, if you donate your car somewhere else, make sure they have the 501©(3) non-profit status. Otherwise, you won’t be eligible to get tax benefits for your car donation.

2. Not Getting A Receipt

If you’ve donated your car to a charity recently and the charity sold the car in an auction, then you need to acquire a receipt of it from the charity. You’re going to need the receipt in the future when claiming the tax benefit for your car donation.

So, you need to get the receipt and a certificate or document of the final selling price of your car. And you’ve to get your hands on it quickly. Generally, the charities are required to generate the document within the next 30 days of selling the car off.

3. Not Filling the Right IRS Form

You won’t get a tax benefit automatically just by donating your car. You’ve got to claim it too. And this is where most people make some horrible mistakes and put them in the risk of an audit by the IRS.

If your charity sold the car for more than $500, then you need to fill up Section A of IRS Form 8283. However, if the FMV (fair market value) or the selling price of your donated car is greater than $5,000, then you need to fill up Section B of IRS Form 8283 and also require to obtain an independent appraisal.

So, make sure you get your paperwork right.

4. Not Understanding What FMV Is

If the charity has been using your car for their own use instead of selling it out or sold at a reduced rate, then you can get the FMV of your car as the amount of tax benefit. That’s why it’s crucial to understand what your car’s FMV is.

The IRS will consider only the FMV of your donated car and not its original resale value. So, you have to get this part right. You can easily determine your car’s FMV by doing a little research online.

5. Failing to Transfer It’s Ownership

When you’re donating your car to any charity, make sure you properly transfer your car’s ownership to the charity. And if the charity asks you to keep the transferring ownership field empty, then you should just literally run from them as far as you can.

If you don’t transfer the ownership, then it’s still your car at least in the legal papers even if you’ve sold it. So, if someone uses your car to do something bad, the police are going to knock your door first.

Scroll to Top
Top 5 Cities Where People Move From Miami Best Time of The Year For The Most Affordable Move Average cost to Hire per number of Mover 5 Important Govt Agencies To Change Your Address With Before You Move