IRS Car Donation Guide

Donating a used car is a popular way for people to support a favorite charity or non-profit organization and receive a tax deduction. Taxpayers must, however, follow Internal Revenue Service (IRS) rules governing vehicle donations.

Features

Taxpayers can deduct the value of a used vehicle donated for charity only if they itemize deductions on the Form 1040. In addition, the maximum deduction the IRS will allow is the fair market value of the donated car. The fair market value is not the same as the "Blue Book value," listed in used car guides.

Types

Before donating a used vehicle to charity and claiming a tax deduction, make sure that the intended recipient is a qualifying organization. The most common eligible organizations are known as 501(c)(3) organizations, such as charitable, educational and religious groups.

Size

Taxpayers claiming a deduction for a donated vehicle must get a written acknowledgment from the recipient organization if claiming a deduction of $250 or more. If claiming a deduction of more than $500, taxpayers must complete Section A of IRS Form 8283.

Warning

For a deduction of more than $5,000, taxpayers must complete Sections A and B of Form 8283, as well as include a written appraisal of the car, conducted by a qualified appraiser.

Update

Under a 2004 law, if the claimed value of a donated vehicle exceeds $500, and the charity sells the vehicle, the taxpayer's deduction is limited to the gross proceeds from that sale.

Resources

• IRS guide to vehicle donations