Car Donation Program Misleading Claims - Beware!
Some car donation programs make claims that are misleading to persons wishing to make a car donation. Facts about claims concerning car donation.
If you wish to make a car donation please BE AWARE of the following misleading terminology:
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These statements give the impression that the charity can provide something special to that donor by using that charity.
They seem to say, "If you make your car donation to our charity you will receive __________," (which would be some sort of tax benefit that perhaps another charity cannot provide--This is misleading).
No charity can influence or declare how much tax benefit you will receive from a car donation.
Maximum Deduction -- Full Fair Market Value
Your car donation tax deduction is based on the Actual Fair Market Value. You do not magically receive the "maximum deduction" or the "full fair market value." There is no such thing.
And according to the New Tax Law which went into effect January 1, 2005 the fair market value of a vehicle is no longer the primary determining factor. Please visit our New Tax Law Section to get the up-to-date information on noncash charitable deductions for vehicle donations.
The IRS makes this quite clear in IRS Publication 526 and IRS Publication 561 (see our car donation IRS information page) and in the following release:
IRS AND STATE CHARITY OFFICIALS URGE CARE WHEN MAKING A CAR DONATION
Source: http://www.irs.gov/pub/irs-news/ir01-112.pdf
Here are a few quotes from that news release:
“When done correctly, donating a used car to a charity can help both the charity and the taxpayer,” said IRS Commissioner Charles Rossotti. “We want people to take a few simple steps to avoid possible problems and to make sure they get the proper tax deduction for their donation. Don’t get taken for a ride.’’
Fully Tax Deductible -- Tax Credit
The statement "Fully Tax Deductible" is very misleading. The donation IS "fully tax deductible" for some people BUT NOT for everyone.
To be able to have any tax deduction the person must itemize their deductions. Less than 50 % of Americans itemize deductions.
Another quote from the above IRS Release:
- "ITEMIZE IN ORDER TO BENEFIT – Many taxpayers can’t take a deduction for car donations because they don’t itemize deductions on their personal tax return. For taxpayers, the decision to itemize is determined by whether their total itemized deductions are greater than the standard deduction (for 2001, the standard deduction will be $4,550 for single; $7,600 for married filing jointly). Less than one-third of the nearly 128 million individual taxpayers itemized in 1999, the last year for which complete data is available."
The statement that you will receive a "Tax Credit" is FALSE. There is no such thing as a tax credit for a car donation.
What is the True Data about a Car Donation?
As mentioned above this has changed now since the beginning of 2005. For more information on this visit this web page.
Throughout this web site we do try to provide you with all of the true data.
We urge you to take a few minutes to read the actual IRS references concerning you car donation so that you have the factual data. These references are not difficult to read and the sections of them pertaining to a noncash charitable contribution and a car donation are easily found in the Publications.
If you are not that familiar with how your taxes are prepared or filed please speak to the person that prepares your taxes and find out what a car donation may do for you as a tax benefit. Every person's tax situation is different. A tax preparer or Certified Public Accountant (CPA) should be able to assist you concerning your car donation.
You can also read our simple tax deduction overview page.
Other alerts about donating a vehicle.
To donate a car it is simple as filling out our Online Car Donation Form.
