Tax Benefits of Car Donation
When you donate through our program you are eligible for a tax deduction. However, to claim your deduction you need to itemize on your income tax return.
In 2005, the IRS changed the laws related to tax deductibility of car donations because of exaggerated deductions based on inflated book values. 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 explained as the “Blue Book” or “Guide Book” value of your vehicle. The charity is legally prohibited from providing fair market value to the donor but you can access that information easily. See our car donation to charity help links below for Kelley Blue Book, NADA Guides or Edmunds.
The receiving charity is required by
- 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, companies promising goods or services in return for your car donation are legally cutting into the amount that you can claim for a tax deduction.
Tips to Maximize Your Car Donation Tax Deducation
Car Donation Wizard wants 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:
Which charities accept car donations?
You can donate to any 501(c)(3) charity but they need a car program to legally process your donation. Beware of ‘charities’ where you don’t see their good works in your community. Many car donation companies that claim to support kids or kars are often deceiving well-intended donors with cute websites and jingles. For more information on these unscrupulous operations, you can access useful information through the Charity Watch website.
Can I donate a car to any charity I choose?
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 the IRS Charity Search to search for registered charities. Car Donation Wizard only works with esteemed, 501(c)(3) non-profit organizations.
How can I sign up a charity to get car donations?
If you want to donate a vehicle to a qualified 501(c)(3) organization that doesn’t have a current car donation program, we recommend using Cars for Charity. Cars for Charity is a non-profit organization that has been helping smaller charities process vehicle donations for over 20 years.
Do I need a tax receipt for my car donation?
YES. Be sure that you get a receipt from the charity for your car donation. IRS rules require that all donors receive a charity receipt or IRS form 1098c for their car donation. Car Donation Wizard delivers the charity tax receipt for your records following the sale of your vehicle.
Do I need a 8283 for my car donation?
IRS form 1098c deals specifically with donated vehicles and is required for your donation. However, if the car is worth $5,000 or more, your tax advisor may suggest that an independent appraisal may be completed. Donors may submit an IRS form 8383 if they choose. However, the form requires an independent appraisal and the deduction is still limited to the selling price of the vehicle.
How can I get the maximum tax benefit for my car donation?
Since the deduction is most commonly limited to the selling price of the vehicle, you should choose a charity that works with an experienced automobile expert that can help get the highest return possible. Car Donation Wizard is a service of Advanced Remarketing Services, an organization that has over a decade of experience in selling vehicles for the most money to charity.
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.
Charity Car Donation Help Links
If you have additional questions about deductions and IRS Regulations the following links may be of assistance:
IRS Publication 4303, A Donor’s Guide to Car Donations (PDF)
Publication 526, Charitable Contributions (PDF)
Publication 561, Determining the Value of Donated Property (PDF)
Form 8283 Noncash Charitable Contributions (PDF)
Instructions for Form 8283, Noncash Charitable Contributions (PDF)