Significance

• There are charities all over the U.S. that have car-donation programs, and they will even offer to pick up your donated automobile, whether or not it is running. Some of the charities repair the cars and give them to the less fortunate; or they will sell them "as is" at auction. There are also thousands of processing companies that will distribute the proceeds from the sale of the car to a charity of your choice.
  
  

Function

• Prior to 2005 in the United States, you had to arrive at a value of your donated car before you could claim a deduction on your tax return. However, since many people overestimated the value of their cars, the IRS passed new rules that limit your deduction to $500, unless you can document the price the charity received from the auctioned car, if that figure is higher. That change in the rules reduced the number of cars donated to charity by almost a third.
  
  

Identification

• The primary reason you are making the gift is so your favorite charity will continue the work it does in your community, not for the tax deduction you will receive. Be sure your charity of choice actually has an automobile-donation program, because your donation will yield more dollars if it does.
  
  

Warning

• You might be asked by a charity to sign over your car in blank so it will be easier to re-title it. Remember that you could be liable for any crimes involving the car--not to mention traffic tickets its new driver(s) may amass--after you have given it away. If the charity ever presses that issue, look for another charity.
  
  

Potential

• You can make a difference in your community by donating your car to charity. Besides ridding yourself of a lot of responsibility and receiving a tax deduction for your thoughtfulness, you will have a sense of satisfaction knowing that you have played a part in improving the lot of the less fortunate. There's no better example of an action in which everyone wins.