Donating a vehicle to charity is a fantastic way to get a deduction on your taxes. We have taken the time to do some research for you to help you determine the value of your car donation, boat, RV, truck, airplane or other vehicle.
Nearly every car donation / vehicle donation to charity is tax deductible. The IRS allows you to deduct for your charitable donation, an actual fair market value of your car donation or vehicle donation. There are rules that apply to this process however. Please call us with questions regarding your vehicle donation. We are able to give you an unbiased, 3rd-party recommendation based on our knowledge of the advantages associated with car donations.
How Much Can I Claim as a Tax Deduction?
Rules for claiming a tax deduction for donations of cars, boats, and airplanes valued over $500 limit the allowable amount of such deductions to the gross proceeds received by the charitable organization from the sale of the donated vehicle. When you donate car with Able Heart Charities you are still able to receive the full Fair Market Value tax-deduction if we provide your vehicle to a family in need.
Which Vehicles actually end up going to disadvantaged Families?
Regrettably the vast majority of the car donations we receive are not eligible to be gifted to underprivileged individuals. Able Heart Charities bases our decisions on various factors such as, vehicle age, make and model, mileage, safety, condition, cost of repairs and the needs of the families. Placing a vehicle with a donee family is the exception rather than the rule, donors should assume that their vehicle donation will be auctioned or sold at a retail establishment. (We of course will notify you in writing if your vehicle has been gifted to a disadvantaged individual ). Any chance we get to place a vehicle though, we go the extra mile to make sure it happens.
How Much is my Vehicle Worth?
Appraisal guide values are available to help you determine the anticipated market value of your car donation or vehicle donation. Find out how much your Vehicle is worth – Used Car Value
On January 1, 2005 the IRS changed the tax law governing motor vehicle, boat and airplane donations, instituting a fair, straightforward method for valueing tax deductible car donations. As of January 1, 2005 you are able to deduct the gross sales price that the charity of your choice receives on the sale of your car, boat or airplane.
In the past people were often hestitant because of the ambiguity of the vehicle valuation process. What was “fair market value”, could you use “Blue Book”, the answers were not straightforward and individuals risked having their car donation tax deduction disallowed or reduced by the IRS. With the current tax law this confusion is eliminated.
Under the current tax law if your car sells for more than $500, typically at an auction with many potential bidders, your car donation tax deduction will be equal to the gross sales price received at the auction. The gross sales price is the highest bid received before any deductions for auction or other expenses. For cars which sell for over $500 you will receive a letter from the charity which includes all the information required by the IRS; including sale price, your name, address, charity name, address, tax id #, the car description with VIN # and the donation and sale dates for the vehicle. Include a copy of this letter with your tax return and you’re all set.
If the car you donate is sold for $500 or less the current IRS tax law stipulates that you can deduct the fair market value of the vehicle up to a maximum of $500. The vast majority of donors whose vehicles sells for $500 or less will be entitled to a $500 deduction. To research the fair market value of your vehicle visit the Kelley Blue Book website. The IRS stipulates that you must use the “private party” valuation option. The tax letter you will receive for vehicles which sell for $500 or less will indicate that your car sold for $500 or less and include all the information required by the IRS; your name, address, charity name, address, tax id #, and the car description with VIN #. Also included is the donation date and sale date for the vehicle.
99% Plus of all vehicles donated fall under the regulations detailed above, but in the unlikely event that your donation vehicle is not sold but rather used by the charity, fixed up by the charity and/or given by the charity to a person in need a different set of tax regulations apply. The IRS publication A Donors Guide to Car Donations details the regulations for all situations.