Car Donation

A car donation has become very popular recently. As you buy new cars and no longer need your old car, making a car donation is a great way to claim tax deduction. You must make your car donation to a qualified charity in order to claim tax deductions. Many organizations are desperate for car donations and some of them are not qualified in the eyes of the IRS for tax deduction. So if you want to make a car donation and want tax deduction, make sure you investigate beforehand that the charity you want to make the car donation to qualifies for tax deduction or you may find yourself in trouble with the IRS. Some people make used car donation and some make luxury car donation. You can make a car donation of any kind.

The charity you make the car donation to will appreciate it no matter what kind of car donation you make.

IRS tax deduction limit for car donation

All types of donations are subject to the IRS donation limits. The IRS tax deduction limit for car donation is usually 50% of adjusted gross income. Since cash donations are also subject to this same 50% of adjusted gross income limit, your car donation is added to the cash donation to determine your annual donation and the total cannot exceed the IRS donation limit. The tax deduction total of car donation with cash, if exceeds the IRS tax deduction limit for car donation, can be rolled over and deducted within five years.

Car donation to qualified charity

It is a common mistake that many people fall for to make car donations to nonqualified charitable organizations. There are many organizations that do charity work but are not qualified for tax deduction purposes. If your make a car donation to one of these non qualified charity, then you cannot make the tax deduction of your car donation.

Special IRS substantiation rules for car donations

If your car donation is over $500 in value, special IRS substantiation rules applies for the car donation. In this case, you must obtain a written acknowledgement within 30 days of your car donation or the date that the charity you made the car donation to sells the car without using it in any significant way. If the charity which you made the car donation to sold the car without using in any significant way, your car donation is constrained by the IRS donation limit of the sale proceeds that the charity receives from the sale of your car donation. Information about the sale of your car donation is provided to the IRS. More on car donations in other section of this Charitable Giving website.