1. Give your car away to the right charity. Ten years ago, the IRS allowed deducting the fair value of car donations to charity whether or not the recipient used the car. These days, you can only deduct the fair value of the donated car if the charity used the car for operating needs or gave it away to someone in need.
2. Be familiar with your car’s floor and ceiling prices. A car worth less than $500 may automatically be deducted from your taxes. If the car is worth more than $500, you can only deduct it if the charity uses the car or gives it away. You will also be required to fill out the Section A of Form 8283 with your tax return plus the certification from the charity regarding the expected use of the car. Cars worth more than $5,000 may require an independent appraiser.
Giving away your car for charity is not an easy task after all. However, it is a good way to support a worthy cause and a legal way of enjoying a tax break.