Tax Benefits For Donating A Used Automobile To Charity

Charitable organizations sometimes advertise that they accept used automobiles as donations. The ads are usually too brief to explain the accompanying tax benefit. Any tax filer planning to donate a used car to charity can utilize the written documentation provided by the organization to possibly claim a tax deduction.

A vehicle donation is reported alongside other charitable contributions on a tax return. Contributions are just one category of itemized deductions. Tax filers choose between itemizing allowed deductions or taking a fixed standard deduction. If total itemized deductions exceed your standard deduction, itemizing provides the larger advantage.

A donated car or truck does not necessarily have to be in running condition to be accepted by a charity. Organizations are able to generate funds from the sale of vehicles in various states of repair. The tax reporting requirements for a vehicle donation is determined by the amount of the deduction reported on your tax return.

Vehicle deduction of $500 or less

Your deduction is generally limited to the price that the receiving charity obtains by selling the vehicle. The only documentation needed for a charitable deduction not exceeding $500 is written acknowledgment from the donee organization. No official form is needed to substantiate the donation, and the deduction is simply entered as a routine itemized deduction.

Vehicle deduction between $500 and $5,000

Even if the fair market value of your donated car is more than the charity sells it for, your deduction is still generally limited to the net proceeds of the sale. For a deduction over $500, two additional forms are required to support your tax return. The charity must provide you with IRS Form 1098-C. You then use Form 1098-C to complete IRS Form 8283 and claim the deduction on your return.

Vehicle deduction over $5,000

Since a donee must provide Form 1098-C for all donations over $500, the requirement is also effective for donations over $5,000. The difference in tax filing is that a deduction over $5,000 is claimed on Form 8283 in a section designated for the higher threshold.

There are noteworthy exceptions to consider when determining your deduction. If your vehicle is kept and used by the charity, you are allowed to deduct the fair market value. If the organization provides the vehicle to a deserving individual at a greatly reduced price, you can also deduct the fair market value.

Be sure to take photographs of the donated car for your tax records. Other types of motor vehicles also qualify for the deduction. Contact a profesional tax preparer, like those at Tri Check Inc, for more information about the mutual benefits of charitable giving.


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