Things You'll Need:
- Title to the vehicle
- IRS Publication 78
- IRS Publication 526
- IRS Form 1098-C
- IRS Form 8283
- Schedule A, Form 1040
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Step 1
Choose a qualified charity recognized by the IRS. If you are donating to a national charity such as the Salvation Army or the National Kidney Foundation, this isn't a concern. If you choose a less well-known charity, but aren't sure if it qualifies under IRS rules, you can check IRS Publication 78 (link below), which lists qualified charities. Churches, synagogues, temples, mosques and some government entities are also qualified charities but may not be listed in Publication 78.
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Step 2
Arrange with your chosen charitable organization to donate a car for a tax break. Most charitable organizations either have online donation forms or use a vehicle donation service with online facilities (a link to an example is bellow). To arrange for the donation, you must have the car title and provide the vehicle identification number (VIN), odometer reading and a description disclosing any damage or mechanical problems. Once you've submitted a donation form, the charity or donation service will contact you in a few days to schedule the pickup and title transfer.
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Step 3
Have the car appraised only if the organization will be keeping it to use and the vehicle may have a fair market value of $5,000 or more (the IRS doesn't require an appraisal if he car is sold or the fair market value is under $5000). When the driver arrives to pick up the car, fill out the title and sign it. Follow any state laws governing vehicle ownership transfers, such as removing car tags or having your signature notarized (required in some states). Be sure to get a receipt and keep it for your records. The receiving organization must send you a copy of IRS Form 1098-C that lists the sale price within 30 days of the sale of the vehicle.
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Step 4
Calculate the amount of your tax deduction. If the vehicle is sold for $500 or more, IRS regulations require you to use the sale price as the amount of your deduction. If the sale price is less than $500, you may use fair market value up to $499. If the receiving charity keeps the vehicle to use, you may use fair market value, regardless of the amount. Follow the guidelines in IRS Publication 561 (Determining the Value of Donated Property). Publication 561 is available online at irs.gov.
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Step 5
Fill out and include the required forms along with your itemized tax return. You will need to fill out section A of IRS Form 8283 listing items(s) donated and the amount of the deduction. However, if the deduction is $5,000 or more, list it in section B of Form 8283. Finally, enter the total amount from Form 8283 on line 17 (non-cash deductions) of Schedule A, Form 1040.
