Do check to make sure the organization is legitimate. Search charities by name at the IRS website (look for Publication 78). Or call the IRS directly at 1-800-829-1040.
Do make you are dealing with a charity that’s qualified to accept deductible car donations. Any tax-exempt charity should be able to provide you with a qualifying IRS Determination Letter. The only exceptions are religious charities, which are legally entitled to any type of donations.
Do check the charity’s annual report to see how they spend their funds. Any genuine organization must provide it to anybody who asks. You can also check their financial filings with the State Attorney General's Office.
Do find out what happens to donated cars. Will the charity keep it and use it for their services? Will they sell it to raise money? Recycle it? If they sell the car, is it directly or through an agent? Do they get a percentage or a flat fee? Answers to these questions will give you peace of mind but also provide you with answers should the IRS come knocking on your door.
Do listen to your instincts. Check with the Better Business Bureau if you are not sure about an organization.
The Don’ts
Don’t deduct more than the car’s fair market value. This is not the same as the full "Blue Book" value of the car.
Don’t forget that you are the one responsible for determining the fair value of the car, taking into consideration the condition and mileage of the vehicle. Or you can check the TMV Used Vehicle Appraiser website, where you are prompted to enter the details of the car and receive a ready-to-print report.
Don’t rush over formalities. If your car is valued over $5000, you need to provide a written appraisal for IRS deductions. Find out all the details before you commit to a donation.
Don’t think donating your car is always the best choice. If you are in the 30 to 40 percent tax bracket, the benefits could be substantial. If, however, your car is not worth much and you're down in the 15 to 20 percent bracket, it may be better to sell the car yourself and pocket the money, rather than expecting a large deduction.