If you donate a car to a qualified charitable organization and intend to claim a deduction, you should be aware of the special rules that apply to vehicle donations.
Charities typically sell donated vehicles. If the charitable organization sells the vehicle you donated it to, the deduction claimed by the donor (you) may not exceed the gross proceeds from the sale.
If the donated vehicle sells for less than $500, you can claim the fair market value of your vehicle up to $500 or the amount it is sold for if less than fair market value without the need to file any additional paperwork with the IRS. The donee organization should furnish you with Copy B of Form 1098-C, , Contributions of Motor Vehicles, Boats, and Airplanes, stating the donation amount.
The taxpayer can generally deduct the vehicle’s Fair Market Value (FMV), if:
If the donated vehicle sells for more than $500 and your deduction is $500 or more, you must obtain written, contemporaneous (timely) acknowledgment of the donation from the charitable organization. You must also attach Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, to your tax return.
The written acknowledgment generally must include your name and taxpayer identification number, the vehicle identification number, the date of the contribution, and one of the following:
For more information about donating a car to charity, please contact the office.
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.