Selling an old car can be a real hassle. Classified ads can be ineffective, and online ads can be risky. Many people are reluctant to invite strangers to their homes, and that can make selling a used car even more difficult. At 1stCertified Collision Center, we’re often asked this exact question, so we did a little research and here is what we learned.

If you are in the market for a new car, you will need to decide what to do with your old one. You could trade it in, but trade-in prices can be pretty low. In many cases, donating the vehicle to a charity is a better option. Many charities accept used cars as donations, providing car owners with both a good feeling and a valuable tax deduction.

Do Your Due Diligence and Check Out the Charity Carefully
You’d be shocked how many bogus charities rip off thousands of people every year. Only registered charities qualify for the tax deduction, so you will need to research the organization carefully. Before you arrange for any kind of donation, be it cash or your old car, you will need to verify the non-profit status of the organization.

Most charities that accept car donations will be registered as 501(c) (3) organizations, so look for that symbol on the firm’s website. You can also search online at to make sure the organization is registered as a charity with the tax agency. This step is especially important; if you donate your car to an unrecognized charity, you will not be eligible for the tax deduction.

You May Need to File Additional Tax Forms
You can avoid a lot of things, but don’t mess with the taxman! Filing taxes is difficult enough, and claiming a charitable deduction for your donated car means filling out some additional forms. You will need to itemize your deductions and file Schedule A to take the charitable deduction, but you may need to complete additional forms based on the value of the vehicle.

If the vehicle you donate is worth $500 or more, you will need to complete section A of form 8283 and attach it to your completed tax return. An independent appraisal is required if you are donating a vehicle worth $5,000 or more. You should keep a copy of that appraisal with your tax paperwork, fill out section B of form 8283 and attach the form to your tax return.

The Tax Break is Based on the Fair Market Value
The tax break you receive for your vehicle is based on its fair market value. That value should be included on the receipt you receive at the time of donation. Contact the charity if you do not get a receipt or if that receipt does not list the fair market value.

Some charitable organizations sell all the vehicles they receive as donations and use the proceeds for their good works. Others donate the cars directly to those in need. No matter what the charity ultimately does with the vehicle, the tax deduction you are entitled to is based solely on its fair market value.

Always Consult Your Tax Preparer Before Deciding
Donating a vehicle to charity may make you feel good, but you should always consult your tax preparer before taking that step. You will not be eligible for the tax break if you do not itemize your deductions, and your tax preparer can help you assess the situation.

Every taxpayer is different, and it is important to get specific advice any time you are seeking a new deduction. Donating your car to charity may still make sense, but it always pays to get professional advice before going forward.

Donating a vehicle is a very generous and selfless thing to do, but make sure you follow these steps and you won’t get ripped-off or get stuck with tax issues after the fact. Good, solid advice brought to you by the collision professionals at 1stCertified Collision Center.