- Tax Benefits of Gifting a Car
- If You Gave Money to Someone Can It Be Deducted Off Taxes?
- Does Giving a Car as a Gift Affect Taxes?
- A Tax Credit for a Vehicle Donation
- What Kind of Tax Deductions Do You Get for Donating a Vehicle to a Homeless Shelter?
- How to Deduct the Published Fair Market Value of Donated Vehicles
You may have several reasons for wanting to donate your car. It might cost more to get it in salable condition than you're willing to pay. The car's current market value may be negligible to you. Donating your vehicle might also seem like an easier way to get it off your hands. The IRS has very specific rules when it comes to claiming a tax deduction for donated vehicles. Among the IRS's recommendations for donating your vehicle are checking the value of your car and your potential tax benefit.
To claim a tax deduction for a donated vehicle, you must give it to a qualified charitable organization. If you give your vehicle to a non-qualified organization or individual you cannot take a tax deduction. According to the IRS, a qualified organization is classified as a section 501(c)(3) organization. Most charities, educational and religious organizations qualify. Before you decide to donate your vehicle to a particular organization, you can verify its 501(c)(3) status with the IRS. As of 2012, Publication 78, "Cumulative List of Organizations" is available on the IRS website.
Fair Market Value
The fair market value of your vehicle is the amount that a willing buyer would pay and a willing seller will accept. The buyer and the seller must also be aware of the facts surrounding the car's condition and marketability. According to the IRS, the maximum amount you can deduct for a donated vehicle is its fair market value. A car's "blue book" value does not always coincide with its fair market value.
If the fair market value of your donated vehicle is between $250 and $500, the IRS requires a statement from the charitable organization. The charity must include its name, a description of the donated vehicle, and a statement that the vehicle was received as a gift. You will need this documentation before you claim the tax deduction. The charity must receive the vehicle prior to the end of the tax year. If you are claiming a deduction that exceeds $500, you will need to complete Section A of IRS form 8283. Deductions greater than $5,000 require an appraisal.
You will need to itemize your deductions to claim the value of your car donation, instead of taking the standard deduction. You itemize your deductions on Schedule A. If the car is the only itemized item you have to claim, itemizing your deductions will probably not pay off financially. It's best to figure out whether taking the standard deduction or itemizing will benefit you the most -- if you choose the standard deduction, you won't get any deduction for your donation.
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