Everything You Need to Know About Tax Deduction for Car Donation
How Does It Work?
Would you believe it if we told you that you can claim a hefty tax deduction when you donate a car to a charity of your choice? We’re not kidding! This post will tell you everything there is to know about car donation tax deduction — from the general IRS rules and the amount you can claim, to the different tax forms you should fill out, steps to take, and the best charity to donate to.
Ready to get started? Let’s go!
IRS Tax Deduction Rules
Getting a tax deduction from your car donation requires you to follow all the rules imposed by the IRS. Here are their two most important rules:
- The charity must be an IRS-registered 501(c)(3) nonprofit
For your auto donation to make you eligible for tax incentives, your selected charity must have a 501(c)(3) status. If you’re not sure, you may look it up using the IRS Tax Exempt Organization Search.
- You must have the required documents
Failing to present any document required by the IRS will disqualify you from claiming a tax deduction. These include the tax-deductible receipt the charity sent you as proof that you donated a vehicle, as well as a written acknowledgment that contains the nonprofit’s name, a description of your car, its selling price, and a statement claiming that no goods or services were received in exchange for your donation.
Don’t hesitate to reach out to the IRS for more information. You might also want to consult the nonprofit you donated to as there might be some additional documents you need to submit to the IRS aside from the two we just mentioned.
How Much Tax Deduction Can You Claim?
It all depends on the final selling price of your donated vehicle. If it was sold for $500 or less, you can claim the minimum tax deduction, which is the selling price of your vehicle or its fair market value not exceeding $500. You can calculate your vehicle’s fair market value by using a reputable used-car price guide and/or checking prices online for vehicles of the same make, model, year, and condition.
If it was sold for more than $500, you can claim your vehicle’s exact selling price even if its fair market value is greater than its selling price.
Important Tax Forms to Fill Out
When claiming your tax deduction, you need to fill up certain tax forms based on the value of your auto donation.
If you’re claiming a deduction of $500 or less, you need to present to the IRS the charity’s written acknowledgment of your vehicle donation together with your tax paperwork.
If you’re claiming a deduction greater than $500 but not exceeding $5,000, you need to attach the same document as well as the completed Tax Form 1098-C (Contributions of Motor Vehicles, Boats, and Airplanes) to your tax return. Plus, you are required to complete Section A of Tax Form 8283 (Noncash Charitable Contributions).
If you’re claiming a deduction greater than $5,000, you must attach completed Section B of Tax Form 8283 (Noncash Charitable Contributions). You may also be required to obtain a written appraisal of your vehicle.
It’s best to consult a tax advisor or the IRS for more specific information about charitable contributions. That way, you’ll have the confidence that you’ll be on your way to enjoying a tax deduction.
A Quick Guide to Making a Car Donation to Get a Tax Deduction
To help you stay on the right track, Kids Car Donations has put together a brief step-by-step guide on making a car donation to obtain a tax deduction:
- Step 1: Find an IRS-accredited nonprofit that accepts car donations.
See to it that the charity has the 501(c)(3) title. You don’t want to make the mistake of giving away your car to an organization, only to discover that it is not eligible to offer tax benefits.
- Step 2: Itemize your taxes.
Itemize your tax deduction on line 17 on Schedule A of Form 1040. Keep in mind that your deductions shouldn’t exceed 50% of your gross income.
If your tax deduction claim is $500 or higher, you’ll have to fill out Form 828. Section A of that form is for tax deductions ranging from $501 to $5,000 while section B is for those higher than $5,000.
- Step 3: Present proper documentation.
These would be your tax-deductible sales receipt and the written acknowledgment form from your chosen charity.
- Step 4: Claim your tax deduction.
After completing steps 1 to 3, you may now claim your car donation tax deduction from the IRS. You deserve it!
We Can Give You the Highest Possible Tax Deduction!
Are you looking for an IRS-certified 501(c)(3) nonprofit to donate your unwanted car? Do you want to help ailing kids in your community recover from their illnesses? If your answer is “yes” to both questions, Kids Car Donations is your perfect charity partner.
Once we have your auto donation, we’ll sell it and use the proceeds to help fund the vital pediatric healthcare services of our nonprofit partners. These IRS-accredited charities cater to indigent youngsters across the country who are suffering from serious illnesses and disabilities.
Thanks to your gift, beneficiaries in your area will gain easy access to free comprehensive and quality medical assistance, including emotional support and other essential healthcare services.
We’ll deliver your automobile to one of the best auction houses in our network and exert our best effort to sell your vehicle at its highest possible price. This way, you’ll be able to get the maximum tax deduction for your car. Your tax receipt will be mailed to you within 30 days following the sale of your donation.
We accept almost all types of vehicles, including those that are no longer in good shape. Visit this page for a comprehensive list of vehicle types that qualify for our donation program.
To know more about our vehicle donation program, including our quick and convenient process, head over to our FAQs page. If you have any inquiries or concerns, give us a call anytime through our toll-free hotline at 866-634-8395 or write to us here.
Get a Huge Tax Deduction While Helping Save Children’s Lives Today!
What are you waiting for? Convert your beater into a source of wellness for your community’s hurting kids and personal satisfaction for you. Call Kids Car Donations at 866-634-8395 or fill out our secure online donation form now!