Some Things You Should Know About Car Donation Tax Deduction

 

If you donated your car to charity or thinking of donating your car to charity there are some things you should know about car donation tax deductions that will help make the process much easier.  In short what you should know about car donation tax deductions can be found in the in the IRS manual "A Donor's Guide To Vehicle Donations".  However, in short, here are some very important things that you need to consider.  It is also to your advantage consult a tax professional or the IRS directly if you have specific questions about car donation tax deduction.

 

The Basics of Car Donation Tax Deduction

Read "A Donor's Guide To Vehicle Donation" from the Internal Revenue Service, IRS.
You should search the IRS website to make sure that the charity you chose is a qualified charity for you to receive a tax deduction. Since some qualified charities may not be listed on the IRS site-such as some churches, and synagogues, or other religious entities you should call the IRS  Account Services toll free number (877) 829-5500 to be sure they are a qualified charity so that you may receive your tax deduction.

You Can also go to the public library if you do not have access to the Internet or a telephone.  Any public library should have a list of these organizations.

You can only claim donating your car as a deduction if you itemize  using Schedule A of Form 1040 or form 8283. Find out what the deduction amount is from the charity. If they did not provide you with that information within four weeks, give them a call.  Your deduction can be up to $500. If your deduction is more than $500 then you MUST include the following: A written acknowledgment  from the charity containing the following information:
  • 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
You must have written documentation of the donation or a receipt within 30 days of transfer.  To avoid any problems, just get a receipt on the same day and the car transfer to the charity. In case you get audited, you want to make sure all bases are covered and you also want to make sure you get your deduction.

You DO NOT have to attach a receipt to the tax return if you are filing electronically. However, hold on to the receipt in your records.  If you are mailing your taxes, then attach a copy of the receipt to IRS form 8283 and mail in your taxes as normal.

Don't forget to speak to a tax professional if you have any questions. It's better to get it done correctly the first time, rather than having to try and fix it later.

Also Make Sure You Do The Following:

Return the License Plate To The DMV

Remove the plates once your deliver the car or after you have it towed. In California, the plates must remain on the car while in transit. In Arkansas, Alabama, Alaska, Georgia, Hawaii, Delaware, Kentucky, Minnesota, Louisiana, Oregon, Oklahoma, South Dakota, Washington, Texas and California the plates must remain on the car. The plates should then be returned to the DMV.

Submit A Release Of Liability Form

In California as well as in Arizona, you must also turn in a Release of Liability, REG 138 which may be called a "Report of Sale" and put "donation" when it asks for the purchase price.



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References and Resources

IRS.gov: A Donor's Guide To Vehicle Donation

IRS.gov: Form 8283

Turbo Tax: Tax Estimator/Calculator

IRS.gov: Publication 78