Are you preparing to donate a vehicle to a charitable organization for a tax deduction? Here is some basic information on what you need to know:
- Select a charity that is a 501(c)(3) organization
- Determine the value of your vehicle
- The maximum amount you can deduct is the fair market value. A used car guide may be a good resource, but use caution. The IRS will only allow a deduction for fair market value which may actually be lower than the “blue book” value. The fair market value of the car may be impacted by the need for substantial repairs.
- If the deduction is $250 or more you will need to receive written acknowledgement from the charity that includes: name/address of charity, date of donation, place where you donated car, description of car, contemporaneous written acknowledgement from charity.
- If the deduction you are claiming is more than $5,000, you must have a written appraisal of the vehicle from a qualified appraiser, which must include the signature of an authorized officer of the charity and attach it to your return.
This list is not a complete list of everything taxpayers need to know. For more information on vehicle donations, please read the IRS’s brochure, “A Donor’s Guide to Car Donation.”