Car Donation and the IRS

Car donation is a common way for people to support a charity of their choice while receiving a tax deduction allowance. However, it is very important to follow Internal Revenue Service (IRS) rules which govern vehicle donations. You can deduct the fair market value of a used vehicle that you donate to charity but only if you itemize your deductions on the 1040 form.   The maximum deduction the IRS will allow is the fair market value of the donated car. Before you donate a used vehicle, make sure that the recipient is a qualified organization, most commonly known as a 501(c)(3), comprised mostly of charitable, education and religious groups.  When claiming a deduction or more than $250 for a car donation, you must get written proof of the donation from the recipient organization. If you plan to claim a deduction of more than $500, then you must complete Section A of IRS Form 8283.

For deductions of more than $5,000 you must have a written appraisal of the car conducted by a qualified appraiser. In addition you must also complete sections A and B of IRS Form 8283.

Under a law created in 2004, the claimed value of a vehicle donation cannot be more than the gross proceeds from the sale of the vehicle. So before you donate, it’s important to know if the vehicle will be used as transportation or for resale.

The IRS recognizes deductions for donations of all kinds of vehicles including cars, boats and even aircraft so long as the donation is to a qualified charity.  The deductions must be itemized and you must have proper documentation. Before you donate your vehicle, you may want to call the IRS Tax Exempt/Government Entities Customer Service toll free at 1-877-829-5500 or get information online by visiting the IRS Website.