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How your car donation tax deduction works
Prior to January 2005, the IRS was allowing people who donated to a qualified car donation program deduct an amount based on their vehicle's fair market value no matter how much or how little the vehicle sold for. Determining the fair market value of a donated vehicle is often quite difficult and time-consuming, which made determination of the amount of the tax deduction confusing. Fortunately, as a result of the new tax law that went into effect in January 2005, the IRS has taken the guesswork out of determining the value of your donated car, truck, RV, boat or other vehicle.
The IRS allows you the taxpayer to claim a tax deduction as follows:
- We make it easy to get the maximum tax deduction for your vehicle donation! Simply call 1-866-920-1917 and we take care of the rest. Your vehicle is picked up, sold, and proceeds benefit local Minnesota veteran charities, but you also get a 100% deductible receipt.
- If the donated vehicle is sold 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.
- If the donated vehicle sells for more than $500, you can claim the exact amount for which the vehicle is sold.
- In either case, you will receive a 100% tax deductible receipt at the time that your vehicle is sold, stating the amount of the sale.
For any vehicle sold for more than $500, the exact amount it is sold for will be stated on your notification mailed to you, which in turn will be your charitable tax deduction. For additional information, the IRS provides A Donor's Guide to Car Donations (Publication 4303 linked below), which details the determination of the value of your donated vehicle. As always, we help people donate their cars every day, and we would be happy to help you do the same. Feel free to call us at 1-866-920-1917 with any questions you might have and one of our representatives will help you.
Latest IRS Publications Concerning Vehicle Donations And Deductions
- IRS Pub. 526 - Charitable Contributions - An excerpt regarding non-cash charitable contributions
- IRS Pub. 561 - Determining the Value of Donated Property - An excerpt regarding fair market value
- IRS Pub. 4303 - A Donor's Guide to Car Donation - An excerpt regarding new tax law information