1. Headline
  1. Headline
By Laura T. Coffey
TODAY contributor
updated 9/10/2008 2:00:48 PM ET 2008-09-10T18:00:48

It sounds so simple: Donate your used vehicle or boat to charity, avoid the hassles associated with selling it, and score a tax deduction at the same time. Everybody wins, right?

  1. More from TODAY.com
    1. TODAY's Takeaway: Savannah won't 'overshare'; rapping medic cracks up anchors

      Etiquette expert Thomas Farley guides the anchors — including expectant mother Savannah — on what’s acceptable for parents...

    2. Chelsea Clinton is pregnant! Former first daughter expecting first child this year
    3. After helpful mom accidentally steals car, rightful owner is found
    4. Gabriel Garcia Marquez dies at 87
    5. Cool cats! Laid-back felines star in #catband music videos

Not necessarily. As the saying goes, the road to h-e-double-hockey-sticks is paved with good intentions, and it can be surprisingly easy to fumble this well-meaning act.

Before you hand one of your biggest assets over to anyone, read the following tips to be sure you’re making the right moves.

1. Avoid middlemen. Numerous for-profit intermediary organizations advertise aggressively on TV, billboards and elsewhere, offering to help you donate your vehicle to charity. Here’s the catch: These organizations typically keep about 50 percent to 90 percent of the vehicle’s value for themselves, and the charities don’t get what they could have gotten. To prevent this, check directly with charities you admire and find out whether they accept car or boat donations.

2. Find a worthy charity. If the charities you normally support aren’t equipped to accept such donations, do some homework until you find a reputable charity that is. You can research charities’ track records online at this Better Business Bureau site and through Charity Navigator

3. Check the math. If you still feel compelled to use an intermediary organization – possibly because you’re busy – at least ask the organization how much of the car or boat’s value will go to charity. If the organization simply gives charities flat fees — say, $100 for a used vehicle regardless of its value, or $2,000 a month — your donation may not be eligible for a tax deduction.

4. Know the status of your recipient. In order for you to qualify for a deduction, the charity that gets your donation must be an IRS-approved 501(c)(3) organization. Your church, synagogue, mosque or temple likely qualifies. (Check first just to make sure.) You also can visit the Internal Revenue Service’s Web site and search for Publication 78 to find other qualifying non-profit organizations. (Just type “78” into the search field on the IRS home page and you’ll be directed to the right publication.)

5. Do the delivery yourself. Once you’ve identified a worthy charity, recognize that it will have to pay someone to pick up your car or boat for you. To help the charity maximize the benefit of your donation, drop the car or boat off yourself.

6. Transfer the vehicle with care. Want to eliminate all risk of running up parking tickets and other violations after you’ve said goodbye to your donated vehicle? Then formally re-title the vehicle to the charity, and report the transfer to your state’s department of motor vehicles or licensing. Never agree to leave the ownership space on the charity donation papers blank.

7. Your estimate of the donation’s value probably won’t cut it. If your car or boat is worth more than $500, the IRS is going to want to see evidence of how much the charity got for it. (Most charities that accept these donations turn around and sell them for cash.) You’ll need to get a receipt from the charity revealing exactly how much money it made.

8. Know when you can report the fair market value. You won’t need evidence of the sales price if the charity keeps the vehicle or vessel and uses it in its charitable work, or if your donation is worth less than $500. Then you can report its fair market value based on listings from Kelley Blue Book and similar sources.

9. Keep a thorough paper trail. If your donation is worth more than $500, you’ll have to attach IRS Form 8283 to your tax return. If it’s worth more than $5,000, your documentation must include an outside appraisal. You’ll also need proof of the donation, such as a receipt from the charity and a copy of the title change.

10. Be detail-oriented. This paper trail may seem cumbersome, but think about it: This may be one of the biggest charitable donations you ever make. By taking the time to dot the i’s, you can make sure that the charity gets the most benefit and you get the biggest possible deduction.

Sources and resources

© 2013 NBCNews.com  Reprints

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

More on TODAY.com

TODAY's Takeaway
  1. TODAY

    Savannah won’t ‘overshare’; rapping medic cracks up anchors

    4/17/2014 8:38:13 PM +00:00 2014-04-17T20:38:13
  1. After helpful mom accidentally steals car, rightful owner is found

    When Nekisia Davis asked her mom to move her car and her friends' cars while she went on vacation, she didn't expect that she would instead accidentally move the wrong car, prompting the rightful owner to believe her car was stolen.

    4/17/2014 9:14:16 PM +00:00 2014-04-17T21:14:16
  1. Macy's

    Swimmer Ryan Lochte dives into underwear modeling

    4/17/2014 6:29:23 PM +00:00 2014-04-17T18:29:23
  1. Spencer Platt / Getty Images

    Chelsea Clinton is pregnant! Former first daughter expecting first child this year

    4/17/2014 10:32:13 PM +00:00 2014-04-17T22:32:13
  1. Edgard Garrido / Reuters

    Gabriel Garcia Marquez dies at 87

    4/17/2014 8:24:21 PM +00:00 2014-04-17T20:24:21
  1. Have you tried an elimination diet? Weigh in on the food fad

    Could eliminating certain foods from your diet prevent allergies, fatigue, or headaches? Some people think so.

    4/17/2014 8:30:46 PM +00:00 2014-04-17T20:30:46