Car Donation

Selling Your Car is a Hassle:

You already know how hard it is to sell a used car on the open market these days. There’s the hassle of finding affordable places to advertise it, and then you wait and wait and wait for the phone to ring.

Even when it does, it’s somebody trying to nickel and dime you down to almost nothing. And if they don’t do it while they’re on the phone, you can bet they will be doing it as they stand in your driveway.

donate a car for tax breaksAnd in many states you have to worry about them returning it if they’re unhappy with anything in a short period of time. Car donations completely fix this problem.

The car service centers will take your vehicle in any condition, including one that needs towing out of your driveway! You’ll get a very generous donation deduction for your trouble, and a surprising number of charities will even take the vehicle if you’ve lost your title.

How To Donate A Car To Charity

Enjoy Vehicle Donation Tax Benefits

If you donate a car to charity and itemize deductions on your income tax return, it may be possible to claim a deduction for your car donation.

In 2005, the IRS changed the laws related to tax deductibility of car donations because of exaggerated deductions based on inflated book values (book values tend to become less reliable as a vehicle ages). Under the new rules, the deductible amount of your vehicle donation is directly related to the selling price of your vehicle.

Donate a car and if it sells for less than $500 you can take a tax deduction equal to the ‘fair market value’ of your donation up to $500. Fair Market Value is loosely explained as the “Blue Book” or “Guide Book” value of your vehicle. See our car donation to charity help links below for Kelley Blue Book, NADA Guides or Edmunds.

The charity you donate a car to is required by IRS to send to the donor a contemporaneous written acknowledgement (receipt) within 30 days of the vehicle sale. This receipt must include the following:

• The gross selling price of the vehicle (if sold for greater than $500).
• Year, Make, Model and VIN Information.
• A statement that the vehicle was sold at arm’s length between two unrelated parties.
• And a statement that no goods or services were received in return for your contribution.

*Keep in mind that companies that promise goods or services in return for your car donation are legally cutting into the amount that you can claim for a tax deduction for your charitable contribution.

TIPS TO MAXIMIZE YOUR CAR DONATION TAX DEDUCTION:

We want donors to know that donating a car to charity not only helps the organization fund worthwhile research and activities, but you also may be eligible to claim a tax deduction for your charitable contribution. Here are some car donation tax tips:

Make sure the charity is eligible to receive tax deductible contributions. The most common types of qualified organizations are section 501(c)(3) organizations, such as charitable, educational, or religious organizations. Visit IRS.gov to search for registered charities. You should only work with esteemed, 501(c)(3) non-profit organizations.

Be sure that you get a receipt from the charity for your car donation. You must obtain a written acknowledgment from the charity if the total deduction you are claiming for a donated car is $250 or more. Make sure they will mail a tax receipt for your records following the sale of your vehicle.

The IRS will only allow a deduction for the fair market value of the car. This can be found on the tax receipt mailed to you for your donation.

If the car is worth more than $500, the donor must complete Section A of IRS Form 8283 and attach it to their tax return.

If the car is worth $5,000 or more, an independent appraisal is necessary. The donor must also fill out Section B of IRS Form 8283. Take pictures of the car and save receipts for new tires or other upgrades to verify its value.

Always consult your tax adviser or the IRS for more information about how you can claim charitable deductions. The IRS can answer your tax questions and can provide tax forms, publications, and other reading materials for further assistance. IRS materials are accessible through the Internet at www.irs.gov, through telephone ordering at (800) 829-3676, and at IRS walk-in offices in many areas across the country.

Donate you Car and Help Poors

Pick a Charity:

It's very easy to give money or an in-kind donation to a non-profit. The hard part is making sure the non-profit deserves your gift and that you are confident the organization is spending its resources wisely.

The first step is to identify a charity that engages in work that is meaningful to you. For some, that will be helping to feed poor children; for others it will be the local animal shelter, and for others still it will be their religious institution.

There are thousands of non-profits to choose from. The most important thing to verify is that the charity you choose can receive tax-deductible gifts. Most of the time that means it must be registered with the IRS as a 501(c)(3) nonprofit.

Ensure You Can Donate Your Car

Once you've identified a couple non-profits in the area you'd like to support, find out if they accept used cars as gifts. Not all non-profits are equipped to handle that type of donation.

If they do accept cars as gifts, you can then narrow down the list. You can do this by checking each organization's Charity Navigator rating. You can also look up their tax filings on Guidestar, where you can see their financial profile and how much their highest paid employees are compensated.

Additionally, another great way to research a charity is by visiting the non-profit to form your own opinion of the work they do.

Tax Deductions for Donated Cars

The deduction you can take on your tax return is based on the fair market value of the car. You can start to determine that by visiting Kelley Blue Book or the NADA Guides, which both have excellent used car rating tools.

However, keep in mind that these book values are generalizations.

For example, if you determine that your car is worth $5,000, but you know it doesn't start because it needs a new battery, the fair market value is $5,000 minus the price of replacing the battery.