Follow these 5 crucial steps

Follow these 5 crucial steps so you won't fall victim to scams when you donate a non-running vehicle for a tax deduction

Do you want to donate a vehicle to charity to save money on your taxes? There are no shortage of charities shouting for your attention! Sadly more and more of the so-called charities that dominate local commercials and billboards are nothing more than wolves in sheep’s clothing - people who operate highly profitable businesses by abusing loopholes in the IRS rules when you can donate a non-running vehicle for a tax deduction. They might donate a fraction of their profits to charity - they have to in order to keep their status with the IRS. But the amount they donate to charity can be shockingly low, sometimes as low as 1%. Some even form their own charity and staff it with friends and family!

So how do you sort through the clutter to find the best place to donate a vehicle to charity? Here are 5 key points that will help you make sure your tax-deductible car donations are the blessing you want them to be:

1: Cut out the middleman

Finding the best charity to donate a used car doesn’t have to be a stab in the dark – the internet has a couple of easy ways you can evaluate any charity you are thinking of donating cars to. The Better Business Bureau is a natural place to start. At bbb.org the Better Business Bureau evaluates charities on 20 Standards of Charity Accountability including how they spend their money, whether the organization represents itself honestly, and the charity’s willingness to disclose important information to the public. Another valuable resource for people looking to donate a used car for a tax deduction is GuideStar Exchange, found at guidestar.org. GuideStar's mission is "To revolutionize philanthropy by providing information that advances transparency, enables users to make better decisions, and encourages charitable giving." We display the Guidestar and Better Business Bureau seals on all our web pages, which link to their reviews of Volunteers of America.

Better Business Bureau Charity Reviews:

Volunteers of America

GuideStar Ratings:

Volunteers of America

3: A bigger slice means a better place to donate

When you donate a non-running vehicle to charity for the tax deduction, the higher percentage of your donation that goes into programs that help people in your area, the better. The Federal Government doesn’t have a set percentage that a car donation program has to contribute to charity - believe it or not, some actually give less than 10%. When you donate a vehicle to charity it’s smart to take the time to uncover just how much of your car donation will actually make it into programs that help people. Respectable charities will make that information available on their website, or in an online copy of their annual report. You can also find that information online through the Better Business Bureau or GuideStar. Volunteers of America puts an average of 88% of all donations to use in local programs that provide emergency food and shelter, job training, senior housing and youth services for nearly 2 million Americans, including tens of thousands right here in Delaware, New Jersey and Pennsylvania.

4: Look for local impact

If you’re thinking about making a tax-deductible car donation to a charity, and they are vague about the programs they offer and where they offer them, it can be a red flag. If you like the idea of helping people in your community, look for a charitable organization that does good work in your area or state. When you donate a non-running vehicle to a charity with local programs it can provide another plus - you can visit on the programs you donated to, and see how your donation is changing lives. Right here in Delaware, Pennsylvania and New Jersey Volunteers of America serves 175,000 meals a year to people fighting the tough economy, shelters thousands of homeless people, including veterans while providing job training and other support, and provides a permanent housing to seniors who might otherwise be forgotten. All this is made possible when you donate a vehicle to charity.

5: Double check that the charity is designated as an official 501(c)(3) charity by the Internal Revenue Service

If you want to donate a vehicle to charity so you can write it off on your taxes, be absolutely sure your donated car or truck goes to a 501(c)(3) charity - an official designation only the Internal Revenue Service can provide. If the charity car donation program you’re looking into doesn’t have a 501(c)(3) designation, your deduction could be disallowed, and you could end up writing the Internal Revenue Service a check for the taxes you owe, plus interest and penalties. If you want a tax deduction when you donate a non-running vehicle, donate to an official 501(c)(3) charity.