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Tax Donation Info

Find out the latest tax information for your car donation



New Tax Law Takes Effect

The new tax law and Interpretations that affects how much a donor can deduct for noncash charitable donations for cars, boats, aircraft, etc. went into effect on January 1, 2005. This law is now applicable for all car donations and other vehicle donations including boats and trailer, motorcycles, etc. for 2005, 2006, 2007, etc.

Summary of Car Donation New Tax Law of 2005 as applicable to most online car donation charities.

IRS Publications that concern vehicle donations and how much one can deduct



Summary of Car Donation New Tax Law of 2005 as applicable to most online car donation charities

Thanks to the new tax law, the IRS has taken the guesswork out of how to determine the value of your vehicle.

Beginning January 1, 2005 you may deduct the full price we receive for the sale of your vehicle. This greatly simplifies the process for you in several ways.

Under the new law, if your vehicle sells for more than $500 then the following applies:

  • If your vehicle sells for more than $500 you’ll know exactly the amount you may deduct, eliminating guesswork. Thus you no longer have to research and come up with an estimate of the fair market value of the vehicle.
  • The selling price of your vehicle becomes its fair market value and is what you can deduct on your tax return in most cases.
  • This also eliminates the risk of you getting into trouble by overstating the value of your deduction on your tax return.
  • This saves you both time and risk.

If you car sells for $500 or less at auction, you may deduct what you determine as the fair market value of your vehicle or the amount the vehicle sold for, whichever is less, and as long as that figure is under $500.00.



FREQUENTLY ASKED QUESTIONS ABOUT CAR DONATION TAX DEDUCTIONS

QUESTION #1:

Will my donation be good for the year that I sent in the donation form, even if I don’t receive the receipt until the beginning of the New Year?

ANSWER: YES!

IRS Publication 4303, “A Donor’s Guide To Vehicle Donations” states:

“… the written acknowledgment must contain … the date of the contribution…”

The date of contribution is the date that we received the donation form. So it can even be on the 31st of December and will still be for that tax year.

The only exception might arise if you cancel the donation and then resubmit it later, or if the donation is canceled by us or the towing/auction facility due to reasons of inability to make pick up arrangements or lack of proper vehicle documentation, etc. Generally if you work with the towing/auction facility and assist in any problems that might arise then your donation will still be considered effective the date you filled out the donation form.

QUESTION #2:

If I submit the donation form on the last few days of the year and the towing/auction facility does not pick up the vehicle until the beginning of the New Year does the donation still count towards the current year, i.e. the year I submitted the donation form online?

ANSWER: YES!, as stated above.

QUESTION #3:

I want to deduct the full fair market value of my vehicle (which is $3000.00)

Unfortunately that is not how it works. The amount you can deduct depends upon several factors including how much your vehicle sells for as per the IRS references above.

QUESTION #4:

How come some other charities are offering "full fair market value" and you don't?

Actually, what they are offering is not in accordance with the IRS tax law. The way you deduct for a car donation is dependant on many things, one being the sale price of the vehicle. See our information above and or read the IRS Publications referenced above.

Donor Beware

We have given warnings before and we give it again here. As a matter of fact. In one of the revisions of IRS Form 4303, "A Donor's Guide To Vehicle Donations" the IRS pointed out similar warnings to what we published on our web site several years ago.

QUESTION #5:

Can you provide me with a tax receipt and a vacation package?

Actually we do not do that. If a charity provides a commodity, for example a vacation package, in exchange for a car or vehicle donation then the tax receipt from that charity must state the fair market value of that commodity and the fair market value of that commodity must be subtracted from the value of the car donation.

For example, if your vehicle sells for $1000.00 at auction and your vacation package that you receive has a fair market value of $400.00 you can only deduct $600.00. $1000.00 for the donated car, $400.00 is for the vacation package and $600.00 would be the maximum you could deduct. ($1000.00 - $400.00 = $600.00)

We certainly do not want donors to be shocked be receiving a tax letter that states they have to subtract the fair market value of the vacation from the value of their vehicle.

Thus to be fair to donors and to be ethical within the regulations of the Internal Revenue Service we have two different programs. These programs are totally separate. The charity donation program and the vehicle recycle program.

Tax Deduction Overview

We provide here an overview of our tax system and how it applies to charitable vehicle donations. This is not professional advise but some general information for those that might not be familiar with the tax system.

What Would the Value of My Tax Deduction Be?

You can visit our "donate car value page" to find out what donated cars have actually sold for.