Car To Donate For Tax Deduction Guide

On this occasion, we will provide guidance for you as a prospective donor about how to properly donate a car to get tax deductions. There are at least 4 things you need to do before you hand the car to a charity like the following:
  • Check the credibility of a charity
  • Will you get tax benefits?
  • Check the value of your vehicle in the fair market
  • Know your responsibilities as a charity donor
So, if you consider tax deduction as an important goal that you want to achieve then you better go to the four things above seriously.
car to donate for tax deduction

How To Choose The Charity

A quality organization must be your choice if you are an individual who is qualified to deduct charitable contributions for federal income tax purposes. In addition, you also want to claim deductions because you have donated a vehicle to charity.

Because if you don't, your tax will not be deducted. The easiest way is to find out if the organization is in the 501 (c) (3) qualification. Some of them are religious, educational, and charitable organizations. In general, these organizations are known to the public as charities. Therefore, to make you more confident, you can check it online through the IRS website in the tax-exempt organization search section.

qualified-charity-for-tax-deduction
On the IRS site, you can check qualified charities for the tax deduction
Another alternative is that you can get in touch on toll-free service directly via phone number (877) 829-5500.

By contacting the customer service account you can find out more clearly about the organization that you will choose. You need to know that not all organizations that meet the requirements are listed in EO Select Check (Pub.78 data). For example, religious facilities such as mosques, churches, or synagogs are often not required to register to IRS for recognition of exemptions to be an eligible organization. But they are also often not registered.

Qualification For Tax Deductions

Did you know that you can only deduct charitable contributions with the condition that you specify the deductions in Schedule A of form 1040?

schedule-A-of-form-1040


There are other considerations that can be a certain limitation for the deduction of charitable contributions. One of them is the deduction may not exceed than fifty percent of your adjusted gross income. You can refer to publication 526, regarding charitable contributions.

You can get details about claims and deduction limits. In addition, you can also find any organizations that meet the requirements to receive tax reduction contributions. Also, you able to connect with them directly via the toll-free phone (800) 829-3676.

How Much Tax Deductions Will You Get?

First of all, you have to know whether the car you are about to donate meets the requirements or not. An easy way to find out the vehicles that meet the requirements is motorized vehicles that are produced and especially for use on highways, public roads, or others. Boats or airplanes are also included in that group. But, if the vehicle you are holding is intended to be sold to customers, it isn't a quality vehicle. For example vehicle dealer inventory.

The report you receive from a charity is the basis of the amount you can deduct for the vehicle's contribution. So this will depend on what the charity does on the vehicle that you donate. In general, charities will sell the vehicle. If so, the deduction value that you get will only be limited to the gross proceeds from the sale. But, actually, there are exceptions that we will explain as below.

Your Vehicle's Market Value Is More Than Five Hundred Dollars

Written acknowledgment to deduction of vehicle's contribution of more than $ 500 must contain some information based on what the charity actually does to your car to get the fund. Including the following:

  • taxpayer's name and identity
  • vehicle identification number
  • date of contribution

Then it must be completed with one of the following statements:

  • the charity doesn't provide compensation for donations such as goods or services.
  • the real value of goods or services provided by a charity in return for donations and accompanied by an approximate description of values and good faith.
  • the goods or services where they are provided by charity consist entirely of religious benefits that are intangible, if so.

It is very important for you to know that if the acknowledgment doesn't contain all the information needed, then the deduction must not exceed $ 500.

Your Vehicle's Value Is Less Than $ 500

If you claim less than $ 500 or say $ 300 as the value of your car, the acknowledgment must include the name of the charity, a description of your car, and one of the same statements from the charity when the value of the car is above $ 500. You can look back at the statements above.

The Acknowledgment


Remember that you need to get written acknowledgment in or better at much earlier than you file your return for the year you donated your vehicle. Or you can get it on the due date, including an extension time, for filing the return. You will find acknowledgment from the charity in the form of paper copies or electronically via email. Remember, don't attach the acknowledgment to your tax return. Instead, you can save it along with notes to support your donation.

Get a Fair Market for The Value of Your Car


You need to specify your vehicle's value since the date of the contribution if there is an exception that applies to the gross deduction limit or when you claim $ 500 deduction or less.

Usually, when the seller or buyer of the vehicle does not feel forced and both parties have reasonable information related to relevant facts about the vehicle, it could be concluded as a fair market value for you.

When you will use a car pricing guide to determine a fair market value, make sure that the price listed is the same price for the same car, the year of manufacture, the model, the same sales conditions, the same choice, similar accessories, as your car. The fair market value is never higher compared to the prices listed for private party sales.

State Law Rules on Liability


Filing a form with the state motor vehicle department stating that the car has been donated, is needed as evidence for the transfer of responsibility for the previous car owner. Completion of this form is carried out in several states.

Usually, state officials will advise you to be responsible for transferring titles with the aim of ensuring the termination of responsibility for the vehicle. You must willing to remove the original car license plate except if state law requires otherwise. You have to do it before donating the car so you can avoid the responsibility after the vehicle is transferred.


Well, that's the guide you need to know when you plan to donate your car to charity. There is nothing difficult to do when you have good intentions for others in need. Hopefully what you read can provide benefits for you and others.