For many people with an older car that they need to get rid of, auto donation is a great alternative to trying to sell the car. There are many donation centers that will work with a prospective donor to get a car to auction for the charity of their choice. However, the process of donating your car does require a little bit of preparation, and you need to keep your expectations for the tax-deduction benefits realistic.
Donating your car to charity involves contacting a collection company, arranging a pickup and filling out the paperwork. Charities that use car donations to earn money do it by auctioning off donated cars at a charity car auction. For a charity organization to actually make money on your car donation, they need to be sure that it will sell at an auction for enough money to offset the collection and paperwork costs. This means that old cars that don't run and other cars with significant issues will generally not be accepted by a car auction charity service.
Many car donation charities run advertisements that make it look like junked cars can be worth money to you when you donate them to charity. While helping the charity of your choice is a good thing to do no matter what, some people go into an auto donation thinking they will come out of it with more than the car may be worth. This is almost never the case. The maximum amount of money that you can put on an itemized deduction for a car donation without the actual auction amount is only $500, which rarely makes it worth itemizing your tax deductions. Many donation organizations will provide paperwork for how much your car auctions for after the auction if you request it, which can be used to make a higher deduction if you donate a good car.