Donating a vehicle to charity may be one of the most significant acts of kindness a person could do for a noble cause. It is a simple way to make a meaningful contribution without having to drain your pocketbook.
At some point, most people who drive end up with a vehicle they don’t need anymore. Whether the vehicle is too small, too big, too old or outdated, finding a way to get rid of it becomes a time-consuming project. Gifting your vehicle to a good cause is a great way to give your vehicle a new purpose. It’s not hard to learn how to donate your vehicle to charity, and we hope this donation value guide can be helpful.
Best Charities for Car Donation
The most optimal charities to donate a vehicle to are non-profit organizations that are qualified for vehicle donations. According to the IRS publication 4303, the most common qualifications are groups that are section 501(c)(3) organizations which usually include religious, educational and charitable groups. This qualification ensures that your vehicle donation will be eligible for a tax deduction.
You can verify that an organization is a non-profit group that is qualified in receiving tax-deductible vehicle donations by using the EO Select Check tool on the IRS website under Charities & Non-Profits. You can also check over the phone by calling the Tax Exempt and Government Entities division of the IRS customer account services. You will need to have the charity’s official name and address when calling.
The best way to ensure that a charity is qualified for vehicle donations is to use DonateACar.com’s charity database. Each charity that we have partnered with has been guaranteed by DonateAcar.com to qualify for vehicle donation tax deductions. We have done the work for you making it easy to choose a worthy charity.
Qualifying for a Tax Deduction
After you have ensured that the charity you are donating a vehicle to is qualified for vehicle donations, how can you be sure that you can receive a tax benefit for your donation? We find the answer on the IRS publication 4303.
According to the IRS car donation rules, you may deduct vehicle donations to charity only when you itemize the deduction on your Schedule A of Form 1040.
How Much Can I Deduct for My Car Donation?
(The following rules on deductibility apply to donations of qualified vehicles. A qualified vehicle is any motor vehicle manufactured primarily for use on public streets, roads, and highways; a boat; or an airplane. If you have a non-qualified vehicle, see IRS Publication 526 or contact us at 1-800-237-5714 for the rules and limits that apply to property donations.)
There are certain limitations on deductions of qualified vehicles. For instance, the amount you deduct cannot be more than half of your adjusted gross income. The amount you are allowed to deduct depends on the amount that your vehicle sells for at auction. Generally, it is limited to what the gross proceeds of the sale are. However, there are certain exceptions.
After you donate your vehicle, you will receive a receipt or written acknowledgment from DonateACar.com with the amount you can use for tax purposes. This receipt should contain your name, taxpayer ID number, vehicles identification number, the date of your contribution, the gross proceeds received from the sale of your vehicle, and a statement that nothing was provided by the charity in return for your donation. Your tax deduction cannot exceed the gross proceeds of the sale.
If your donated vehicle sells for more than $500, you must fill out Section A of IRS Form 8283 and include it with your tax return. You must include the written acknowledgement from the charity that is sent to you showing that the vehicle was sold at “arm’s length” between two unconnected parties. Then you can deduct the gross proceeds amount of the sale.
If your donated vehicle sells for $500 or less, you will want to find out what the fair market value of your vehicle was at the time of donation. Basically, fair market value is the amount a buyer and seller would agree upon with reasonable and relevant facts about the vehicle. It cannot be more than the price listed for a private-party sale. If the fair market value of your vehicle is over $500 and the gross proceeds of the sale is less than $500, then you may deduct up to $500.
If your vehicle is sold for $5000 or more, you must also fill out Section B of IRS Form 8283.
What is The Fair Market Value of My Vehicle?
Fair market value (FMV) is the amount your vehicle would sell for in an open market between two private parties where both buyer and seller are reasonably knowledgeable about the condition of the vehicle.
To help determine the fair market value of your vehicle, you can check with vehicle pricing guides like Edmunds or Kelley Blue Book online. You must enter the exact year and model of your vehicle, current mileage, your zip code, and check all the correct amenities and options. Then you honestly assess your vehicle’s exterior, interior and mechanical condition. This will give you an idea of the FMV.
Remember that FMV is not the same as trade-in value. You can also compare your vehicle to other vehicles for sale or recently sold that are most similar to your year, make, model, mileage and condition. Calling your bank and talking to the vehicle loan department may also help you determine the FMV of your vehicle.
IRS Car Donation Requirements for Filing and Recordkeeping
When submitting your tax return with a charitable deduction more than $500, you must attach the written acknowledgment that you received for your vehicle donation. Records and files needed for charitable contributions depend on the amount that you are claiming.
For deductions that are more than $500 and up to $5000, you will need to fill out Section A of Form 8238 and include it with your Form 1040 of your tax return.
For deductions that are more than $5000, you will need to fill out Section B of Form 8283 which will need to include the authorized signature of the charity official and then include this form with your tax return.
Here is a chart to visually see what is required for your records and for tax filing.
|Requirement||Less Than $250
|$250 to $500
|Higher than $500
to $5000 deduction
|Higher than $5000
|For Record keeping|
|Name & Address of Charity||X||X||X||X|
|Where Vehicle was Donated||X||X||X||X|
|For Tax Filing|
|Section A – Form 8238||X|
|Section B – Form 8238||X|
For more information on the amount you can claim on your tax return and forms that must be filled out, see the IRS Publication 4303.
How Do I Donate a Car to Charity?
Donating a vehicle to charity couldn’t be easier than at DonateACar.com.
First, choose a charity. Look through our list of hundreds of charities. You can search our list using a category like animals, health, children, seniors, U.S. armed forces, environment, and so on; or you can type in a keyword like cancer, lupus, kidney, etc. You can also scroll to our footer and click on a state to browse through our charities by area to find a non-profit group in your community to support.
Second, fill out the online form or give us a call at 1-800-237-5714. This is where you share the information about yourself and the vehicle you are donating. This begins the process. We take care of all the detailed paperwork. Depending on the state you live in and what type of vehicle you are donating, you will likely need to provide a title. Our title experts can help you with any title questions.
Third, get a call to schedule free pickup of your vehicle. A professional towing company with contact you to pick up your car within 24 to 48 hours. You can have your vehicle picked up at the location and time convenient for you. Be sure to have the title and if needed according to the type of vehicle, a signed and/or notarized title if required by your state.
Fourth, receive a receipt in the mail soon after your vehicle is processed that you can use for tax deduction purposes.
Fill out this simple form or call 1-800-237-5714 to donate.
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