Are Car Donations Tax Deductible?
Are Car Donations Tax Deductible?
So, after careful consideration, you’ve finally made the decision to let go of your old automobile and donate it to a charity. Then, like many other would-be donors, you might have found yourself asking the question: “Is donating a car tax deductible?”
Well, we’re happy to tell you that your vehicle donation can enable you to get significant tax savings if you make the donation to a nonprofit organization and if you include it in your charitable contribution deduction.
However, before you get too excited and immediately dial the number of a nonprofit, you must know that there are important things to consider. For instance, not all charity or nonprofit organizations are actually qualified to give out tax deductions. To obtain tax rewards from your vehicle donation, make sure you follow these steps:
1. Pick an IRS-accredited organization.
Keep in mind that there are charities that are ineligible to hand out tax benefits. To determine whether your chosen nonprofit is qualified or not, just check if it has a 501(c)3 status. If you’re not sure, you can check the status of the organization by visiting the IRS Tax Exempt Organization Search here.
2. Declare an amount.
Before claiming your tax deduction when you file your itemized income tax return, you have to decide first on the best option for declaring the amount of your deduction. You have two choices: Either you claim a tax deduction based on your vehicle’s actual selling price at auction or your vehicle’s fair market value. For example, if the IRS-certified 501(c)3 nonprofit organization sells your vehicle at auction for $2,000, your deduction is limited to $2,000, even if its fair market value is $4,000.
Normally, you can only claim your vehicle’s selling price if the charity sells your donation for more than $500. However, there are certain conditions where you can claim the fair market value of your vehicle if it’s higher than the selling price. These are:
- The charity uses your vehicle for its own internal operations
- The charity sells your vehicle at a discounted price for someone in need
- The charity makes changes or improvements in your vehicle.
There’s another instance where you have the option to claim your vehicle’s fair market value. This happens when your vehicle sells for $500 or less. In this case, you can claim as your tax deduction your vehicle’s fair market value but not exceeding $500 – if the amount is higher than the selling price.
We suggest you consult a used car valuation guide such as the Kelley Blue Book or Edmunds to determine your automobile’s fair market value.
3. Prepare all the necessary documents.
Claiming your tax deduction requires you to submit certain forms and documents. Make sure that you’ve completed and organized all the files needed by the IRS. These include the tax-deductible sales receipt that will be mailed to you by the charity within 30 days after your vehicle is sold at auction, as well as the written acknowledgment from the charity confirming that you made a donation.
Don’t forget to itemize your taxes carefully to maximize your tax deduction.
4. Claim your deduction.
Once you’ve finished filing all your papers, it’s time to finally claim your tax deduction from the IRS. If the amount of your tax deduction is more than $500, you’ll be asked to complete Form 8283. If it is worth between $501 and $5,000, you’ll need to fill out Section A. If it is worth over $5,000, you’re required to complete Section B and submit it with an attached written appraisal.
Let Kids Car Donations Be Your Partner in Charity
If you’re still searching for a car donation program that works with IRS-certified 501(c)3 nonprofits, you’ve just found one! Here at Kids Car Donations, we guarantee our donors nothing but the best service. From our free towing service to our quick, hassle-free, and no-paperwork donation process, you definitely won’t regret teaming up with us.
When you donate your old and unwanted vehicle to us, we will auction it off and use the proceeds to help fund the vital services being provided by our IRS-certified 501(c)3 charity partners to children of indigent families who are facing serious medical conditions. Thus, with your vehicle donation, you’ll be helping save the lives and restore the good health of these ailing children.
As for your tax deduction, we guarantee you an amount that will bring a huge smile on your face. We’ll assist you every step of the way in the donation process and help you resolve whatever problem that might crop up. Just reach out to us at 866-634-8395, and one of our specialists will guide you.
You can make your car donation by filling out our secure online donation form or calling us directly. We accept almost all types of vehicles regardless of their age or condition. We also accept vehicle donations anywhere in the United States since we have vehicle donation programs in all 50 states.
Bring Joy to Needy Families with Ailing Kids
By teaming up with us, you’ll be bringing joy to the hearts of needy families with seriously ill children while giving yourself tax incentives and other rewards, too. Call us at 866-634-8395 and get started with your car donation!