Tax Questions

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 IRS to send the donor a receipt or "contemporaneous written acknowledgement" within 30 days of the vehicle sale. This receipt must include the following:

  1. The gross selling price of the vehicle (if sold for greater than $500)
  2. Year, Make, Model and VIN Information
  3. A statement that the vehicle was sold at arm's length between two unrelated parties
  4. 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 Deduction

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:

  1. 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 here: https://www.charitywatch.org/charitywatch-articles/charity-finishes-last-at-car-donation-charities-micro-mini-share-of-proceeds-go-to-charity/163
  2. 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. Car Donation Wizard only works with esteemed, 501(c)(3) non-profit organizations.
  3. Be sure that you get a receipt from the charity for your car donation. Car Donation Wizard delivers the charity tax receipt for your records following the sale of your vehicle.
  4. If the car is worth $5,000 or more, an independent appraisal may be necessary. The donor would fill out Section B of IRS Form 8283.
  5. 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 question 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)

Links to Valuation

Kelley Blue Book
www.kbb.com

Edmunds
www.edmunds.com

NADA Guides
www.nadaguides.com

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