Car Donation Charity - Donate Car
IRS Tax Deduction FAQs and Information
Following are important information and links about tax deductions and
charitable contributions for your car donation.
Help a child. Donate Your Vehicle & Receive...
• Fast Free Towing all vehicles • Tax Deduction (or free vacation) • All With No Paper-work Hassle!  |
 |
To receive a tax deduction you will need a tax receipt from a charitable organization, such as ours, which is fully recognized as a bona fide 501(C)(3) Charity.
A change in the Tax Laws introduced in the beginning of 2005 is important to know:
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.
If you are not fully familiar with the tax system you might want to take a look at our vehicle donation Tax Deduction Overview page.
To further illustrate the car donation and tax deduction process we present some of the more frequently asked questions:
Each of the following car donation Tax Deduction FAQs are answered in detail below. Just click on the question to get the answer.
1. What information should be in a tax receipt?
2. Will I get the maximum value for my donated car on my tax receipt?
3. Does the fair market value get deducted from my taxes owed?
Tax Deduction FAQs
1. What information should be in a tax receipt?
The following is a graphical representation of the information that the IRS requires in order to receive a tax deduction when you file your taxes. You can see that the amount the vehicle sold for determines the amount and type of information you will need to have from the charity:
Recordkeeping and Filing Requirements
Generally, if the charity sells your vehicle, your deduction is limited to the gross proceeds the charity receives from its sale.
* The receipt must minimally contain:
■ your name and taxpayer identification number,
■ the vehicle identification number,
■ the date of the contribution, and one of the following:
■ a statement that no goods or services were provided by the charity in return for the donation, if that was the case,
■ a description and good faith estimate of the value of goods or services, if any, that the charity provided in return for the donation, or
■ a statement that goods or services provided by the charity consisted entirely of intangible religious benefits, if that was the case.Note: If the acknowledgment does not contain all required information, the deduction may not exceed $500.
Gross Proceeds Limit Applies – Generally, if the charity sells your vehicle, your deduction is limited to the gross proceeds the charity receives from its sale.
In addition to the information indicated above, the contemporaneous written acknowledgment must contain:
■ a statement certifying that the vehicle was sold in an arm’s length transaction between unrelated parties,
■ the date the vehicle was sold,
■ the gross proceeds received from the sale, and
■ a statement that your deduction may not exceed the gross proceeds from the sale.To read the PDF article from the IRS website click here.
2. Will you give me the maximum value for my donated car on my tax receipt?
This question is likely the result of various misleading claims made by certain car donation charities. Follow this link to get more information about these types of false or misleading claims.
Beginning January 1, 2005 you may deduct the full price the charity receives 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.
3. Does the fair market value get deducted from my taxes owed?
No. That is not how it works. For a good overview of how the tax system works visit this page.
For more information please see visit our web pages about
IRS Publications 526, 561 and 4303.
OTHER INFORMATION:
For some IRS tips visit this page.
For more tax information visit this page.
Click here to find out how to determine the fair market value of your vehicle.
IMPORTANT DONATION INFORMATION!
TWO FREQUENTLY ASKED QUESTIONS AT THE END OF THE YEAR:
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.
Fill out the Online Car Donation Form and that will begin the process.
