How do I accurately value my vehicle?
If you donate a car to a charitable organization that plans to keep the car, and you wish to claim a tax deduction for your gift, you must determine its fair market value. The fair market value of your vehicle cannot be determined by a charity, since the IRS considers that to be a "conflict of interest." A charity's tax receipt for car donations is, however, proof that you made the donation. If the vehicle has a value of $5,000 or more, then a certified vehicle appraiser must determine the vehicle's value.
The fair market value of cars is affected by a number of factors. To help further define your specific vehicle's value, make sure you accurately select the options on your vehicle. These could include a sunroof, leather interior, power windows, automatic door locks, et cetera. Check all that apply, and be sure to be accurate.
If you donate a car to a qualified charity that will keep and use the car, the value of your charitable contribution is usually the fair market value of the car at the time of the donation. Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.
When you have a vehicle or vehicles to donate, know when and how to use the legitimate fair market value of the vehicle. Calculating your car donation tax deduction must be done correctly.
According to IRS publication 561, "If you contribute a car, boat, or aircraft to a charitable organization, you must determine its fair market value."
Certain commercial firms and trade organizations publish guides, commonly called "blue books," containing complete dealer sale prices or dealer average prices for recent model years. The guides may be published monthly or seasonally, and for different regions of the country. These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. The prices are not "official" and these publications are not considered an appraisal of any specific donated property. But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area.
"Example: You donate your car to a local high school for use by their students studying automobile repair. Your credit union told you that the "blue book" value of the car is $1,600. However, your car needs extensive repairs and, after some checking, you find that you could sell it for $750. You can deduct $750, the true fair market value of the car, as a charitable contribution."
Note that using fair market value only applies when you donate a car to a charity and the charity retains and uses the vehicle, rather than selling it.
The Kelley Blue Book can help you determine your vehicle's value when you are considering donating cars. In fact, a good car donation charity should provide a link from their website right to the KBB guide itself. It is a valuable first step in learning how to calculate value on vehicles. Start by logging on to http://www.kbb.com. [Click on: “Used cars” at top, and select the year, make and exact model of your vehicle, then press “GO”. Select "Private Party Value."] You also need to fill in the exact mileage on the car and the zip code in which you will be stating that you live on your tax return.
Your tax consultant may assist you in deciding how to value your car donation, but you - the donor - and not the recipient charity, are required by the IRS to be the sole party responsible for determining what the IRS calls the "fair market value" of your car donation, taking into full consideration its condition at the time of donation. Most vehicle donation programs or a good car donation charity will assist you with this. When making car donations for charity, it is very important point to be accurate and fair in assigning a value to your vehicle; do not inflate the value you claim as a tax deduction.
Some fundraisers have mistakenly claimed that donors can, in all cases, deduct the full value of their cars as found in a used car guide (such as “blue book” value). A used car guide may be a good starting point from which to determine your car's value, but you should exercise caution. The IRS will only allow a deduction for the fair market value of the car, which may be substantially less than the “blue book” value. If you are planning to claim tax deductions on car donations, you need to be accurate in making car donation valuations.
If your donation is worth more than $5,000, then you will need an appraisal and a signed 8283 tax form for your tax purposes. Most charities that accept car donations can arrange to have your vehicle valued by an independent appraiser and provide you with all the necessary documentation to properly claim your tax deduction without any cost to you. It is important to get accurate automobile donation valuations. The charity you choose can help you to learn how to value cars.
When donating a custom or collector car, the car donation tax law remains the same as far as the IRS is concerned: a donor may deduct up to the fair market value of the vehicle when the vehicle is kept and used by the charity. In the case of a collector's item, rather than a standard vehicle, fair market value may be somewhat harder to determine. Nevertheless, you need to ascertain the fair market value for the car, rather than just deducting the money you've put into it. The IRS defines fair market value as "...the price a willing buyer would pay and a willing seller would accept for the car, when neither party is compelled to buy or sell, and both parties have reasonable knowledge of the relevant facts." Obviously, the market for collector's cars is smaller than for regular cars. There is a certain segment of the population that understands and appreciates the value of a car like yours, and might be willing to pay you what you think its worth. But others would not. So you need some legitimate way to document how you came up with the figure; it may make sense to use an appraiser. In any event, if you think the car is worth more than $5000, and want to take that amount or more as a deduction, a professional appraisal is needed. The appraiser has to sign off on your Form 8283, which is the form you submit with your tax return when you donate a car.
Another good way to find out the value of your car donation is to look in local newspaper ads for "comparables" - models with similar wear and tear.
Under new car donation IRS rules, you can only deduct up to the value for which a charity sells the donated vehicle, unless the charity keeps and uses the vehicle, or makes material improvements to the vehicle before selling it. Find out whether the charity will be retaining and using the vehicle, or making improvements to the vehicle before re-selling it. If so, use fair market value. If not, then the charity will provide you with and accounting of the price at which it sold the vehicle, and you can deduct that amount from your annual federal taxes.
Car Donation Frequently Asked Questions
Do boat donations follow the same guidelines and procedures as other vehicle donations?
What steps do I take to donate a car to charity?
What information will help me decide whether and to whom to donate my car?
To which charities can I donate a vehicle?
Should I give directly to a charity, or through a third-party fundraiser?
What car donation charity should I choose?
Is my car donation tax deductible?
Do I have to pay to have my car towed or delivered to the charity?
How should I handle the title and insurance?
What kind of vehicle donations can I make?
Does my car donation have to pass a smog or emissions test first?
Where can I get a handicap card for my car?
Why do people donate a car?
What are the philosophical reasons people donate vehicles?
What are the practical reasons people donate vehicles?
Does FCF pick up cars in my area?
How do I arrange a car donation in Alaska?
How do I arrange a car donation in Arizona?
How do I arrange a car donation in California?
What charities may I give to that operate in California?
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What charities may I give to that operate in Colorado?
How do I arrange a car donation in Connecticut?
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What charities may I give to that operate in Florida?
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What charities may I give to that operate in Illinois?
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What charities may I give to that operate in Maryland?
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What charities may I give to that operate in Massachusetts?
How do I arrange a car donation in Michigan?
What charities may I give to that operate in Michigan?
How do I arrange a car donation in Minnesota?
What charities may I give to that operate in Minnesota?
How do I arrange a car donation in New Jersey?
What charities may I give to that operate in New Jersey?
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What charities may I give to that operate in New York?
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What charities may I give to that operate in Texas?
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What charities may I give to that operate in Washington DC?
How do I arrange a car donation in Wyoming?
What charities may I give to that operate in Wyoming?
How do I find out if the organization to or through which I am donating is legitimate?
Should I worry about being scammed?
What should I know about car donation services?
How do I accurately value my vehicle?
How can I check out a car donation charity or program?
What are the IRS Car Donation Regulations?
What national charities accept vehicle donations?
Do RV and motor home donations follow the same rules as car donations?
To which vehicles do the rules and regulations of the IRS apply?
What kinds of vehicles can I donate?
How can I find out about vehicle donation programs?
Do charities run their own car donation programs?
How do charities decide to spend their proceeds from car donations?
What kind of receipt do I need from the charity for a vehicle worth less than $500?
Are the rules different for donating expensive cars?
Who is responsible for transferring the vehicle's title?
How can a charity get the most value from my car donation for its causes?
What is a 501(c)3 organization?
Is there a booklet that explains IRS rules for vehicle donations?
What incentives do vehicle donation programs offer to get my business?
Where can I donate a car in Los Angeles?
Does the Red Cross run a vehicle donation program in Los Angeles?
What kind of car donations programs can I find in the Bay Area?
If I have concerns about my Bay Area car donation, who can I turn to for help?
What kind of charity should I seek for Chicago car donations?
Where can I find a comprehensive listing of Chicago car donations.
How can I protect myself from unscrupulous practices when making New York car donations?
Is there a car donation program endorsed by New York City officials?
Where can I get trusted recommendations for New York car donations?
Where can I find a car donation service that is speedy and convenient?
Can I donate my used boat to charity?
How much of a write-off can I expect for my boat donation?
Are there charities that actually use the boat donations in their work?
How do I determine the fair market value of my boat donation?
How can I get a tax deduction for my boat donation?
Where can I get help with a boat appraisal?
How can I get fair market value for my boat donation?
What is the Deed of Gift in a boat donation?
What is fair market value?
How do I claim a tax deduction for my boat donation?
How can I verifty that a Massachusetts charity is recognized by the IRS?
What are some major Massachusetts charities with car donation programs?
Where in Maryland can I donate my car?
Where can I get a replacement title for my Maryland car donation?
Where can I learn about charities to make a Florida car donation?
How can I get background on charities when making a Michigan car donation?
What is an example of a well-established Michigan charity that accepts car donations?
What do I do to replace a lost car title in Minnesota?
Where can I get a list of registered charities that offer Minnesota car donations?
Where can I access state forms for making a New York car donation?
Can I donate my RV charity just as I would donate a car?
What are the steps to donating an RV?
How do I figure the tax deduction for a donated RV?
Are there exceptions for deducting the market value of a donated RV?
When I donate an RV, should the charity give me a receipt for it?
How can I find out the donated RV's resale amount?
Do I need to have my RV appraised before donating it?
How can I learn the tax rules for donating an RV?
Are there nationwide charities that accept RV donations?
How do I know if donating an RV to a charity is right for me?
Can I value my car donation at the fair market price?
What are the policies for taking a tax write-off on a car donation?
What documents do I need from the charity when making a car donation?
Does the charity need to let me know how they will use my car donation?
How do I choose the right charity for my vehicle donation?
Do charities routinely disclose information on donors?
How can I tell if a charity that takes car donations is financially sound?
What policies do charities have for accepting vehicle donations?
Can I take a standard deduction for dontaing a vehicle?
Why do we need government oversight of vehicle donations?
Can the Better Business Bureau help when I am making a vehicle donation?
Why make a vehicle donation?
What is the first step to making a vehicle donation?
What kind of vehicle can I donate to charity?
When can I make a vehicle donation?
Who accepts vehicle donations?
Where can I make a vehicle donation?
How do I get my tax deduction for the vehicle donation?
How can I get information on a charity before making a vehicle donation?
What questions will charities aks me about my car donation?
What kind of records should I keep for car donations?
What should I ask a charity before making a car donation?
Why do I need to know how a charity will use my car donation?
Do charities reap big revenues with car donations?
Which car donation programs are the best?
Why do Americans make car donations?
What are the new rules for car donations?
Where can I go to learn more about IRS rules for donating cars?
What do I do with the title when donating a car to charity?
What do I have to do to donate my car?
What steps do I need to take to meet car donation tax laws?
Why do I need to know car donation tax laws before donating?
How can I verfiy a charity's tax-exempt status?
What are the IRS rules for car donation deductions over $500?
What IRS rules do I need to follow when deducting a car's fair market value?
Do I need to itemize my car donation tax deduction?
How do I avoid problems with the IRS when making a car donation tax deduction?
What if my used car is not fair market value?
What IRS form do I need to fill out to claim my car donation?
What's the process for following new IRS rules for car donations?
Will the charity help me comply with IRS rules for vehicle donations?
How can I meet my needs and goals as a car donor?
What services should I expect from car donation programs?
How can the Internet help in my search for car donation services?
Can pricing guides also direct me to charities?
Why did Congress pass tighter laws for car donations?
Are vehicle donations the best choice for disposing of unwanted cars?
What are you looking for in car donation services?
What kinds of vehicles are accepted by car donation services?
How do I avoid pitfalls when donating my car to charity?
Recent Car Donation Questions
What if the car being donated is a collector`s item, rather than a standard vehicle ?, I have a collection and selling is such a hassle, I would rather donate this car instead, but the valuation would need to be fair market based on my investment in the vehicle.
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what percentage of a donated vehicle may I right off? does the tax bracket I fall in impact the amount of the right off?
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Am I liable for towing costs a collection agency is demanding after I donated a car to charity? The charity sold/disposed of the car, the buyer incurred the costs before my name cleared from DMV records. Receipts and letters from the charity (included the name of the new owner) have not persuaded the collection agency.
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where can i get a handicap place card for my car? it hangs in rear view mirror. thanks
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Does the vehicle need to pass a smog check in order to donate it?
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