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Car Donation Deduction on your Taxes
What is a Car Donation Deduction
If you have a vehicle that you no longer need or want and instead of selling that vehicle you opt to do a charitable car donation you may be able to claim that donation as a deduction on your taxes. A lot of the charitable organizations and foundations that are around today survive in large part off of the donations that they receive by individuals and donors who support the cause they are working to help, change or bring awareness to.
IRS Information on Car Donation Deduction
To claim a vehicle donation as a tax deductions it entails more than simply signing the car over to a chosen charity. Some of the steps that need to be followed in most cases to qualify are:
- Proper documentation from charity: acknowledgements for receipt; repairs/improvements made to donated vehicles , gross proceeds
- Fair market value of vehicle in the condition it was when donated
- Appraisal by certified appraiser
- Itemized tax deductions
(reference IRS Publication 526 for details on forms and receipts that are required by the IRS in order to itemize and request a tax deduction on your auto donations)
Car Donation Deduction - Qualifying Charities and Foundations
In order to claim a car donation deduction the charitable organization or foundation that your donated vehicle goes to must be recognized as qualifying by the IRS. This basically means that the organization (with the exception of some religious entities such as: churches, mosques, synagogues etc) must have filed for tax exemption status and have been approved through the IRS under a 501 (c) 3 or similar not for profit title as long as they are not out of the country organizations or foundations. You can check out IRS publication 78 for an extensive list of some of the charities that are set up to offer deductions for donation made to them.
The downside to publication 78 is that a lot of the local organizations are not necessarily listed and therefore may be a bit more difficult to find out about qualifications. (More information on how to check qualifications can be found in Choosing the right Charity for your Vehicle Donation)
The donation must also not be made in trade. IF you benefit from the charity or have a chance of benefiting (raffle ticket purchases, drawing entries, trades etc) from the donated goods you may not be able to request a deduction. This is typically only not applicable if the donated goods far exceed the value of the goods/services received in return.
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If you're a donor you know all the benefits of being one (first of all, a good inner feeling because of helping somebody who really needs it) but if you're not a donor and you're distrustful about donations learn how giving to charity is a great tax
Forms and Publications that you May Need or that are Helpful
Helpful Publications from the IRS
- #78 - (extensive list of qualified charities - not including government and many religious orgs that are tax exempt without having to file for determination of tax exemption status)
- #526 - Charitable Donations
- #4303 -Guide to Vehicle Donations
- #561 - Determining Value of Property Donations (Fair market value)
Needed Forms (depending on circumstances of donation; deduction price; terms etc)
Whatever the reason may be that you are considering donating to charity it is a move that you will find that is appreciated by many. As you are surely aware - the majority of charities that have been established have been so for a reason. The causes that they support are typically topics that affect millions of people a year whether it is poverty, abuse, neglect, awareness or disease.
Don't let the process required for a car donation deduction scare you off from your decision to donate to a worthy cause. With careful planning and itemization your willingness to help could wind up benefiting you and the cause that touches your heart or has left its mark on your life.