You have an unneeded car that isn't getting much use and is costing you money in insurance and licensing fees. You're feeling generous and you want to donate your car, but do you know how? Donating a car to a charity is a pretty simple process, but you need to know the rules in order to get the most tax-wise out of your donation.

Do Your Homework!

The first thing to do after deciding to donate your car is to follow this list:

> Check Kelly Blue Book Value of Vehicle.

> Dig out last year's tax returns to see if you itemized deductions or claimed the standardized deduction. What you did last year is a good indication of what you will do this year, unless you have made enough charitable donations to push you over the standard deduction.

> Call the organization you want to donate your car to and ask if they accept vehicle donations.

> Read IRS Publication 78 and check to see if the organization you want to donate to is a qualified charitable organization. Order, read, and understand the following:


- IRS Publication 526: Charitable Contributions
- IRS Publication 561, Determining the Value of Donated Property
- IRS Publication 4303: A Donor's Guide to Vehicle Donations
- IRS Summertime Tax Tip 2009-21 - Ten Tips for Taxpayers Making Charitable Contributions (or the most current IRS Tax Tip about charitable contributions)

Why Donate (Otherwise Known As "What's in it for me?")

First, selling a used vehicle can be frustrating. If it is not running, then you have to fix it. You may have to clear the carpets or sand out rust. Once it is in saleable condition, there is the expense of placing ads, dealing with test drives, making appointments around your schedule and having to wonder about personal safety and liability with your vehicle. Donating will get you value for your vehicle (in many instances) without a lot of expense or hassle. Plus you get the added benefit of doing a good thing for others, supporting a worthy cause, and being a good guy (or gal). To top it off, some charities offer their own incentives like a hotel voucher in the city of your choice.

Things to Remember When Donating:

> Find forms, publications, and information at www.irs.gov or 800-TAX-FORM (800-829-3676.

> You must be using Form 1040, Schedule A if you are deducting charitable contributions.

> Written acknowledgment is required from the organization to substantiate any donation of $250 or more, including the value and description of donation and whether the receiving organization provided any goods or services in exchange.

> If you receive anything in return for your donation, the fair market value of what you receive in exchange gets subtracted from the fair market value of your donation for your deduction, so if you donate a $8000 car and get $2000 season tickets, you must declare the $2000 and can only deduct $6000 for your car donation.

> The organization to which you are donating your vehicle does not assess fair market value of the vehicle. That must be done with a professional appraisal or other appropriate, legal documentation of the vehicle's value at the time of donation.

> File with your state's motor vehicle department stating the vehicle has been donated to avoid liability.

> Do the math - figure your taxes both with the standard deduction and with itemized deductions including your car donation. If your itemized deductions total less than the standard deduction for which you are eligible, you may not want to donate.