Tax Benefits of Donating a Car
PLEASE REMEMBER THAT EVERYONE’S TAX SITUATION IS DIFFERENT, SO CONSULT WITH YOUR TAX PROFESSIONAL TO DETERMINE HOW YOU CAN BENEFIT.
Vehicle donation program wants to reassure donors that because the proceeds of their donations will help fund non-profit organization’s missions, this charitable contribution will make them eligible to claim a tax deduction. Your motivation may be an act of convenience or benevolence, either way it’s important to be assured that you could obtain the maximum tax credit allowed.
The tax law that took effect back in January of 2005 has helped make things less confusing. Because of the IRS, car donation is now less complicated in determining your cars value. Before 2005, tax benefits of donating a car were based on inflated book values, which tend to get less reliable as the car becomes older. With this new law, the amount you can deduct for your vehicle donation is precisely related to the amount it sells for.
- We make it simple to get the maximum tax benefits of donating a car. Call us and we take care of everything else.
- Your car is professionally towed at no expense to you, and then sold at auction.
- The proceeds from the sale benefit the charity you have chosen and you will receive a receipt for your tax purposes.
How much do you get for donating a car?
- If your donated car sells for under $500, you are allowed to claim the fair market value of your car up to $500.
- If your donated cars sells for more than $500, you are allowed to claim the precise dollar amount that your car was sold for. We will provide you a completed IRS Tax Form 1098-C with your donated vehicle’s sales amount within 30 days after the sale.
- If your donated car sells for over $5000, you’ll also need IRS Tax Form 8283. When filing taxes, you will need to fill out IRS Form 8283 Section B which must include the signature of an authorized official of the charity.
According to Publication 4303 of IRS, when a donated car sells for more than $500, the precise amount it sold for will be reported on the receipt that is mailed to you. This is the amount of your vehicle donation tax deduction. If your donated vehicle sells for less than $500, you can claim the fair market value (FMV) of your car up to $500.
Paperwork Needed When Filing for a Tax Deduction
For a tax deduction of $500 or less, the IRS will need:
- The name of the charity, information of your donated vehicle, and information if any goods or services were received and what their value was.
- This information is typically found on the receipt that will be sent to you.
For a tax deduction of more than $500 to less than $5000, the IRS will need:
- The name of the charity, information of your donated vehicle, and information if any goods or services were received and what their value was
- Form 1098-C Copy B –OR- a legal substitute
- if you are filing on-line – form 8453.
For a tax deduction of more than $5000, the IRS will need:
- IRS Form 8283 signed by an official of the charity
- Form 1098-C or a legal substitute like the receipt from the charity
You can claim your tax deduction in the year that you donated your car. Be sure to include all the needed documentation as shown above with your federal income tax return. To find out if your car donation qualifies for a state tax deduction, check with your state’s tax department.
We Accept Car Donations in All 50 States:
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia