Make Sure the Organization is Qualified

As taxpayers we have to make sure the organization is eligible before we contribute our cars to them. If theyʼre not qualified, our donation will not be tax deductible. You can read the publication to see if the organization qualifies for the car donation tax deduction.

Publication 78 is a list that lets you know if the organization is eligible to receive the car donation. This list is available in most public libraries or you can call the IRS Tax Exempt Customer Service.

Churches, temples, mosques, synagogues and governments do not have to apply in order to be qualified to be on the list. Car donations to institutions like this are always tax deductible.

Itemize in Order to Benefit

There are two ways to get a deduction. One is by itemizing and the other is by taking the standard deduction. Check on the tax form you are using for the standard deduction amount. It will be different for each situation. For example, if youʼre married, single or filing jointly. If the standard deduction is more than your itemized donations then, you would be better off to take the standard deduction.

Be Honest About the True Value

You have to take many factors into consideration to determine the value of the car. There are a lot of used vehicle guides on the market to help you find the true market value. You are only allowed to deduct the gross amount of the sale. If the charitable organization made any improvements to the car, they are supposed to let you know within 30 days what the gross profit was. Do not go by the highest value for the vehicle. Consider the mileage, age, any damage and base the value on all of those facts.

Make Sure You Document the Contribution

When you donate your vehicle; you have to document the donation and its fair market value. You will need a receipt from the organization. IRS Publication 526 has all of the details on the rules and regulations for the receipt and forms. There are a few differences depending on the value of the car and the total amount of charitable deductions you have.

When in Doubt

If you have any questions about your car donation as a tax deduction, you can go to TurboTax Online to find answers.

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