IRS Rules for Car Donation

By Jeannie Knudson

  • Overview

    The Internal Revenue Service (IRS) has specific rules governing gifts and donations, including car donations. When claiming a car donation deduction with the IRS, the value of the donated car and whether the donation was made to an acknowledged charitable institution both play a part how much an individual is able to write off for tax deductions.
  • Qualifications

    Find out if the charitable institution you donated or plan to donate the car to is a qualified charitable institution. Generally, car donations to religious organizations, private foundations, political organizations and most non-profits are eligible. The IRS publication "Cumulative List of Organizations" lists not only current charities you are allowed to make tax donation claims for, but suspended charities as well. If a charity is not shown in the IRS publication, you may still be eligible to claim your donated car by calling the IRS toll-free number at (877) 829-5500.
  • Value

    Establish the value of the donated car. Car price guides and comparable vehicle sales of the same make, model and year of the car you donated can be used to establish the fair market value of a vehicle. The amount that the donated car is worth will help determine your charitable tax deductions, particularly if the charity intends to use the vehicle rather than sell it. If the fair market value of the donated car is more than $5000 you will need a written appraisal.

  • Deductions

    The amount that the IRS allows for deduction on your taxes from a car donation depends on what the organization you have donated the car to uses the vehicle for. If the charity receiving your car donation sells the vehicle, your tax deduction may be limited to the proceeds of the sale. If the charity intends to use the vehicle, the deduction may be more or less than sale proceeds depending on the value of the vehicle.
  • Combined Deductions

    Your charitable car donations and deductions must be itemized on your tax return. Generally, to qualify for a tax write off or deduction on your tax return, the combined amount of charitable deductions, including car donations cannot be over 50 percent of your gross income.
  • Tax Forms

    File the proper IRS tax forms. The IRS rules for car donation can vary from year to year. Speak with a qualified tax consultant or check with the IRS via the official website or by phone for possible tax updates. Car donation deductions require an additional tax form, 1098-C to be attached to your regular tax return. If the car appraised at more than $5000 you will also need to include a copy of the written appraisal.
  • Paperwork

    Make sure that you acquire and keep all paperwork relevant to the car donation. You should receive a written paper or acknowledgement of donation from the charity upon donating the car. If the charity sells the car you should also receive paperwork regarding the sale. Upon donating a car, you should have filed a paper with your local Department of Motor Vehicles stating that the car was donated. Request a copy or receipt from the department for your records.
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