Car donations are both an act of charity and an income tax write-off

If you think your car won't fetch much as a trade-in and don't want the trouble of selling it yourself, you can always explore the possibility of donating it to charity. It's an act of good will, and the donation can serve as a tax write-off.

In large metropolitan areas, the Better Business Bureau estimates that 8,000 to 10,000 vehicles are donated to various groups each year. They are then resold, which grosses $4 million to $5 million annually.

The Better Business Bureau recommends that you check out the charity before making a donation to ensure the organization is eligible to accept vehicle donations. If you want more information on a charity, request a copy of its Internal Revenue Service Determination Letter, which verifies tax exemptions for charities.

Many national charities will pick up your vehicle even if it doesn't run, usually free of charge. This service provides you with an easy way to get rid of your vehicle and gives you a noncash charitable tax deduction; the donation amount is determined by the charity, which is required to send you documentation of the IRS-allowed donation amount within 30 days of when you turn your car over.

You can claim a charitable deduction when you file your federal income tax. Along with your 1040 tax form, you'll need to submit Form 8283 if your total deductions for all noncash contributions for the calendar year exceed $500. For more information on how to file for noncash contributions, consult your tax advisor or visit the Internal Revenue Service's website.

You'll also need to sign over the donated vehicle's title to the charity, and the organization will give you a tax receipt for the vehicle. Charitable organizations use vehicle donations in several ways. Some sell the vehicles and use the profits to help fund programs. Other charities use the vehicles for their own programs . One such program is the Good News Garage, which provides reconditioned donated vehicles to people of low income.