IRS Car Donation and Tax Information
A car donation to charity can be a great way to get a deduction on your taxes. Thanks to new tax law that went into effect in January 2005, the IRS has taken the guesswork out of determining the value of your car, truck, RV, boat or other vehicle.
As of January 2005, you may deduct the full price we receive for the sale of your car or other vehicle. This greatly simplifies the process for you, the donor, because you no longer have to research and come up with an estimate of the fair market value of the car or other vehicle.
This also eliminates the risk of you getting into trouble by overstating the value of your deduction on your tax return. You'll know exactly the amount you may deduct, eliminating guesswork. This saves you both time and risk.
The IRS allows you, the taxpayer, to claim a tax deduction of
- a) The value of your vehicle up to $500 or
- b) If we sell the vehicle for more than $500, we will mail you a notification stating the exact amount for which it sold, which is the value you state for your tax purposes.
- c) Fair market value in some cases for certain vehicles. For example, late model cars or vans that end up being used to further the work of our charity OR vehicles on which we make a significant material improvement such as a major repair, before selling it. (see "How The Amount Of Your Vehicle Donation is Determined")
In any case, you will receive a receipt at the time that your vehicle is picked up.
Assuming that we sell your vehicle for more than $500, we will then mail you a notification stating that value for your tax purposes. So for any vehicle sold for more than $500, the exact amount it is sold for will be stated on your notification mailed to you, which in turn will be your tax deduction.For additional information, the IRS provides A Donor's Guide to Car Donations, which sets forth the manner in which the IRS requires you to determine the value of your donated property. See below a link to A Donor's Guide to Car Donations. (You need Adobe Reader to view this file - click here to download the free Reader.)
Please feel free to contact us at 1-888-831-1352 with any questions you may have.
Before donating your car, we encourage you to read the latest official IRS information on vehicle donations, released in June 2004 -- Publication 4303, 'A Donor's Guide to Car Donation'. Included is some of the most relevant information below:
I donated a used car to a qualified charity. I itemize my deduction, and I would like to take a charitable contribution for the donation. Do I need to attach any special forms to my return? What records do I need to keep?
If you claim a deduction on your return of over $500 for all contributed property, you must attach a Form 8283 (PDF), Noncash Charitable Contributions, to your return. If you claim a total deduction of $5,000 or less for all contributed property, you need only complete Section A of Form 8283. If you claim a deduction of more than $5,000 for an item or group of similar items, you need to complete Section B of Form 8283, which requires a qualified appraisal by a qualified appraiser.
You will need to obtain and keep evidence of your car donation and be able to substantiate the fair market value of the car. If you are claiming a deduction of $250 or more for the car donation, you will also need a written acknowledgement from the charity that includes a description of the car and a statement of whether the charity provided any goods or services in return for the car and, if so, a description and estimate of the fair market value of the goods or services.
For more information on these requirements, refer to Publication 526 (PDF), Charitable Contributions, Publication 561 (PDF), Determining the Value of Donated Property, Noncash Charitable Contributions, and its instructions, and Tax Topic 506, Contributions.
The publications on the IRS website are in a viewable and printable form that require Adobe Type Reader to view and print.
Introduction provided on IRS Form 526:
"This publication explains how to claim a deduction for your charitable contributions. It discusses organizations that are qualified to receive deductible charitable contributions, the types of contributions you can deduct, how much you can deduct, what records to keep, and how to report charitable contributions.
"A charitable contribution is a donation or gift to, or for the use of, a qualified organization. It is voluntary and is made without getting, or expecting to get, anything of equal value.
"Qualified organizations. Qualified organizations include nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose, or that work to prevent cruelty to children or animals. You will find descriptions of these organizations under Organizations That Qualify To Receive Deductible Contributions.
"Form 1040 required. To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. The amount of your deduction may be limited if certain rules and limits explained in this publication apply to you."
IRS Tax Form for filing taxes -- Form 8283
There is a tax form that you will need when you fill out your return. It is form 8283. You can find this form at the IRS web page http://www.irs.gov/pub/irs-pdf/f8283.pdf. The instructions for this form can be found at http://www.irs.gov/pub/irs-pdf/i8283.pdf.
IRS Car Donation and Tax Information