October 25, 2018
Are Car Donations Tax Deductible? Know the Facts Here
Car donations are definitely tax deductible but require accurate paperwork in listing all your charitable contributions.
A car is similar to any other gift given to charity. However, car donations are a bit more complicated compared to other gifts because your car’s value determines what specific form you will file with the IRS, and determining the value of your car is not that easy.
Filing Your Car Donation for a Tax Deduction
In filling your yearly income tax return or Form 1040, you will need to itemize your deductions for your car donation and other charitable contributions to be counted. The charity is required to give you an acknowledgment letter that describes the donated vehicle given as a gift. The letter needs to be attached to Form 1040.
If you donated a car that is valued at less than $250, then simply keep a record of the gift.
If you donated a car that is valued at $250 up to $500, you need to keep a record of the gift and get an acknowledgment letter from the charity.
If you donated a car that is valued at more than $500 but not greater than $5,000, you are also required to complete Section A and file a Noncash Charitable Contribution Form 8283.
If you donated a car that is valued at more than $5,000, you will need to complete Section B and file a Noncash Charitable Contribution Form 8283, as well as a written appraisal of your car from a qualified appraiser.
How to Determine the Value of Your Donated Car
The value you can deduct for your donated car will depend solely on what the charity will do to your car once you donate it. It’s either they sell it for gross proceeds or use it for other purposes, in which case you will need to use your car’s fair market value.
The distinction between gross proceeds and fair market value needs further clarification:
If the charity sells your car, which happens most of the time, the value of your car donation is the gross proceeds the charity gets when they sold your car. This amount will now be your tax deduction, and this is required to be listed in the acknowledgment letter that the charity will give you.
Fair market value
You can base your tax deduction using your vehicle’s fair market value if:
- The charity plans to use your donated car rather than sell it.
- The charity makes significant improvements to your vehicle.
- The charity will sell or give your car to someone in need for a value less than its fair market value.
You can calculate your vehicle’s fair market value by checking out online resources such as the Kelley Blue Book, which offers online calculators that can help you estimate the value of your car.
Take note that the charity is required to notify you whether your deduction should be based on gross proceeds or fair market value.
You Can Maximize Your Tax Deduction with Us
If you want to get a maximum tax deduction for a vehicle you’re planning to donate, you can get that if you donate it to us at Veteran Car Donations. We will deliver your vehicle to one of the best auction houses in our network and exert our best effort to sell your vehicle at its highest possible price ceiling. This way, you’ll be able to get the maximum tax deduction for your car.
While you obtain the highest possible tax write-off for your car donation, your charitable act will also enable you to contribute significantly to improving the living conditions of the former members of our armed forces residing in your area.
We will use the proceeds from the sale of your donated vehicle to support the critical programs of our nonprofit organization partners that are aimed at helping veterans who are impoverished, jobless, homeless, and suffering from service-connected disabilities, other physical or mental health conditions, and other serious problems.
Thanks to the car donations we get, many more of our nation’s heroes—our courageous veterans who fought to defend our freedoms and protect our nation’s security—will be able to receive mortgage-free and specially adapted housing, physical and mental health care, job opportunities, education scholarships, and other benefits.
For more information about Veteran Car Donations, visit our About Us page. To find out how we conduct our donation process, how you can receive tax deductions and other rewards, what types of vehicles you can donate, and other related matters, check out our FAQs page. For inquiries, you can call our toll-free hotline 877-594-5822 or send us a message online.
You can make your car donation by either calling us or filling out our online donation form. We accept vehicle donations anywhere in the United States since we have car donation programs in all 50 states.
Call us at 877-594-5822 and get started with your car donation!