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IRS Information

IRS guidelines for car donations as of January 1, 2005 (From the IRS website):

"Donors should understand the way that the American Jobs Creation Act of 2004 will alter the rules for the contribution of used motor vehicles, boats and planes after Dec. 31, 2004. Next year, if the claimed value of the donated motor vehicle, boat or plane exceeds $500 and the item is sold by the charitable organization, the taxpayer is limited to the gross proceeds from the sale.

Under the new rules, the charitable organization must provide an acknowledgement to the donor within 30 days of the sale stating the amount of gross proceeds. Alternatively, if the charity significantly uses or materially improves the vehicles, the charity must certify this intended use and duration and provide an acknowledgement to the donor within 30 days of the contribution. If the charity significantly uses or materially improves the vehicle, generally, the donor may deduct the vehicle’s market value."

Summary of car donation tax deduction legislation

The charity that you donate your car to should provide a receipt for your car donation proving that your vehicle was donated to an IRS registered charity. When you donate a car to charity and your vehicle is sold by the charity you can claim a tax deduction for the sale value of your donated vehicle. For vehicles that sell for $500 or less the charity will simply provide the original pickup receipt and you can claim up to $500 for your car donation according to the actual value of the donated vehicle.

If the sale price of your vehicle donation is more than $500, then you will receive a second receipt from the car donation charity with the actual sale amount -- and you can claim the full amount of the vehicle sale as a deduction.

However you are permitted to claim the full Fair Market Value of your car donation if: significant repairs are made to the vehicle before the charity sells the vehicle; the charity uses the vehicle donation for its nonprofit purpose; or if the vehicle is sold at a reduced price to low income families.

Helpful IRS publications and forms

IRS Publication 561: Appraisals:
Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5,000, other than money and publicly traded securities, you must get a qualified appraisal made by a qualified appraiser, and you must attach an appraisal summary (Section B of Form 8283) to your tax return.

IRS Form 8283: IRS form for non-cash charitable contributions.

IRS Publication 1771 - Charitable Contributions - Substantiation and Disclosure: This publication explains the federal law for organizations (such as charities and churches) who receive tax-deductible contributions and for taxpayers who made contributions.