Charitable Car Donation

A car donation to a charitable organization is very common. You can donate your car to you favorite charity and claim tax deduction on your car charitable donation.

How much tax deduction can I claim for a charitable car donation?

When making a charitable car donation, the value of your donation that you can claim tax deduction on is usually limited to fair market value of the vehicle. But the IRS rules of charitable car donations are complicated because most owners would like to inflate the value of their car donation to charitable organization to maximize their tax deduction. Once the charitable organization received that car donation and tried to sell it on the market, the charity often got much lower value than stated on the tax deduction form.

Use fair market value for charitable car donation

For a personal use property such as a car, clothing, or furniture, a loss on the sale is not deductible. You can sell the car and then donate the proceed or make a charitable car donation at fair market value.

Written acknowledgement for charitable car donation

For a charitable car donation, obtain a written acknowledgement from the charity receiving the car donation if the value of the vehicle donation is more than $500. This is a new IRS rule on charitable car donation of value over $500.

Filing IRS tax forms for the charitable car donation for tax deductions

You must obtain the acknowledgement using the IRS form 1098-C or a letter from the charity. You must attach Copy B of the IRS tax form 1098-C with your tax return when claiming tax deductions. In addition, you must attach the IRS tax form 8283 with your tax return if your total charitable car donation tax deduction claim added to other donations are over $500.