Retirement & Financial Planning Report

Be careful before you agree to a charity’s request to donate an old car. If the charity sells the car–which usually is the case– you can deduct only the amount it receives, which may not be very much. The charity is required to send the donor an acknowledgment that it received the car and report how much the charity got for selling it.

In many cases, you might be better off selling the car yourself, donating the cash, and getting a receipt to support your tax deduction. You need a receipt or a bank statement to back up a tax deduction for a cash donation.