If you're buying a vehicle and have an old used car to get rid of, your first thought may be to trade the old car in towards the new purchase. However, as an alternative, you could donate your car to a qualifying charity.
If you donate your car, you will get to feel good about giving back to the community and possibly earn a tax deduction. Vehicle donation works out especially well for those who have a car that is or is almost undrivable.

Deciding Whether or Not to Donate Your Car

If you want to donate your used car simply because you think it is the right thing to do and don't care about a tax credit, the process is easy. Just pick out a charity that you like and give them your vehicle.
You will only need to provide the title, have the automobile removed from your insurance policy and make sure that it is no longer registered in your name.
On the other hand, if you want to donate your car to get a tax deduction, the process becomes more complicated.
The charity that receives the car must have an IRS 501(c) (3) designation, meaning that they are "exempt" from taxes.
You must itemize the deduction on your tax return to receive the credit.
You must obtain a receipt from the charitable organization.
If the charity keeps and uses the car, you can typically claim the fair market value (FMV) of the vehicle as a deduction, typically the Kelley Blue Book (KBB) retail value.
If the charity sells the car at auction, you can deduct the selling price of the car. And if the vehicle sells for less than $500, you can deduct the FMV of the car up to $500.
A vehicle donation tax deduction is not dollar-for-dollar credit. It is based on your income bracket which determines the percentage that you pay in taxes.