An individual who wants to donate his or her car to charity can benefit from the vehicle donation. When a person donates a car to charity, he or she automatically becomes eligible for a tax deduction.

The first thing to do is know the value of the car for donation. It's better to take pictures of the car and have documents ready to show how much the value of the car is. It is the donor who has the responsibility of having his or her car appraised to know its value. It's advised not to over value the car because the IRS will impose penalties on the donor if he or she is found guilty.

Look for a charity which accepts car donations and check if you will be given a tax deduction for your car donation. Ask for a copy of the letter of determination from the IRS to show the tax exempt status. Keep it for your records. You have to verify if you will have some obligation when you give a car to charity.

When you already know the value of your car and have chosen the charity for your vehicle donation, you have to ask for a receipt for your donation from that selected charity. Keep that receipt for record purposes. Non-cash charity donations are usually audited by the IRS. Having the receipt will validate how much your car is actually valued at.

For auto donations which value up to $500, a corresponding IRS form must be filled out and attached together with the acknowledgement letter from the charity to their income tax return. When the charity has already sold the car, it will provide the donor within 30 days a certification which validates that the sale was made between the two unrelated parties. Likewise, it will also confirm as to how much the car was sold for. The tax deduction that the donor is entitled to will be limited only as to how much the car was sold for.

If the charity failed to notify you regarding the sale of the car you donated, you must remind the charity and request that it immediately send the details of the donation. A copy of the acknowledgement letter and the IRS form that has been filed together with your income tax return must be kept for record purposes just in case the IRS audits your non-cash charity donation.

On the other hand, if the charity chooses to use the car for its operations and make improvements on it, a certification to the donor will have to be made by the charity indicating this intention. In cases like this, the donor could get the maximum possible tax deduction because the car will be based on the fair market value.

For auto donations where cars have a value of $5000 and above, the car will have to be appraised by an independent party. A corresponding IRS form will have to be filed by the donor. Donate your automobile or car to the charity of your choice. Your donation is tax deductible and you will save money.