How Do I Estimate the Value of My Car for My Tax Deduction?
Donating your car to a charity can earn you a tax deduction, but you need to properly document the process if you want to avoid an audit. In most cases, you cannot assume that the highest listed value of the car is the amount that you can deduct. Based on your car's value and what the charity ultimately does with the vehicle, you can determine the amount of your tax deduction.
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Instructions
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Look up the car's value in the Kelley Blue Book. If the charity will actually use your car, rather than sell it for the money, you can use the value that's listed in the Kelley Blue Book, if the car is worth less than $5,000. Use the car's make, model and year to look up the value. Be realistic about the condition of the car --- if it needs repairs or has some body damage, you cannot use the highest amount as the value of the car.
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Get a receipt from the organization. If the charity sells your car for the money, then you can only deduct the exact value that the charity receives for the car. This may be less than the estimated value from the Kelley Blue Book. If the charity sells the car, they must send you a copy of the receipt within 30 days.
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Hire an outside appraiser. If your car is worth more than $5,000, you'll need an outside appraiser to determine the value of the car. The charity may be able to recommend a local appraiser.
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Tips & Warnings
If your car is worth at least $500, but the charity sells it for less than $500, you can deduct $500 from your taxes.
When using your donation as a tax deduction, you must fill out Form 8283 if your donation was worth more than $500.
In order to qualify as a tax deduction, you must donate your car to an IRS-approved charity. Before making your donation, double-check that the charity is eligible.
References
Resources
- Photo Credit car image by Vitezslav Halamka from Fotolia.com
