1.How much can I deduct?
When you donate a car via Car Donation Wizard, the IRS allows you to claim a tax deduction of:
a) The value of your vehicle up to $500. It is up to the donor to determine the fair market value.
b)The amount we sell your vehicle for – if it is more than $500.
2. Is that rule the same, even if the charity decides to use the vehicle or give it to someone in need?
The amount you are able to deduct can also depend on what the charity does with the donated vehicle.
a) Charity sells the vehicle: Your deduction is limited to the gross proceeds the charity receives from selling the vehicle. If that amount is less than $500, you may be able to deduct the fair market value up to $500.
b) Charity uses the vehicle: Your deduction is limited to the fair market value of the vehicle.
Here are some examples from the IRS website that will clarify:
Example 1: On April 1, you donated your car to the local
food bank. When you donated the car, you had determined
that the fair market value was $4,300. On November 10,
the charity sold your car (to someone other than a needy
individual), without any significant intervening use or material
improvement, and received gross proceeds of $3,700. Your
deduction may not exceed $3,700.
Example 2: The charity certifies in an acknowledgment that
it will make significant intervening use of the vehicle by using
it daily for at least a year to deliver food to needy individuals.
Your deduction may not exceed the fair market value of your
Example 3: The facts are the same as in Example 1 except
the charity only received gross proceeds of $400 from the
sale. Your deduction may not exceed $500.
Need more answers? The IRS publishes A Donor’s guide to Vehicle Donation.