Question:

What are the IRS Car Donation Regulations?

Review the new IRS publication specifically addressing questions on car donation.

The IRS has issued new guidance for donors wishing to donate their car to charity. It is Publication 4303, "A Donor's Guide to Car Donation". It can be found on the IRS website at http://www.irs.gov/pub/irs-pdf/p4303.pdf. A good car donation charity will provide a direct link from their site to this IRS publication.

Keep a record of your car donation.

You will need to obtain and keep evidence of your car donation and be able to substantiate the fair market value of the car. If you are claiming a deduction of $250 or more for the car donation, you will also need a written acknowledgement from the charity that includes a description of the car and a statement of whether the charity provided any goods or services in return for the car. If so, you will also need a description and estimate of the fair market value of those goods or services.

The new IRS vehicle donation policies are intended to protect charitable organizations and donors seeking to support those organizations.

In a 2003 study, the United States General Accounting Office (GAO) estimated that about 4,300 charities had vehicle donation programs. For tax year 2000, the GAO estimated that about 733,000 taxpayers claimed deductions for donated vehicles they valued at $500 or more. However, in some cases, the charity actually received less than 10% of the value claimed on the donor's return or actually lost money on some vehicles. Inflated deductions are dishonest, and they hurt the charities. Therefore, the IRS has created materials to educate donors and charities on what constitutes a well-run donation program, focusing on helping donors to correctly value their donations, and teaching them to ask the right questions to ensure that the services through which they are giving actually benefit the destination charity. In addition, charitable organizations are required to provide documentation of the gift and its value to the donor and to the IRS.

Review IRS car donation publications.

Before donating, make sure that you have read and understand the official IRS information on vehicle donations, which can be found in IRS Publication 4302, as well as 526 and 561. The car donation charity should provide you with online access to these documents, and be able to explain them to you if you have any questions.

Trade copies of applicable tax forms with the charity and keep them on file.

If the amount of your deduction for your car donation is more then $500.00 then you must file the IRS Form 8283: Non-cash Charitable Contributions (http://www.irs.gov/pub/irs-pdf/f8283.pdf) with your itemized tax return. A copy should be mailed to the charity or donation program. The IRS requires that the charity verify your donation and file IRS Form 8282: Donee Information Return (www.irs.gov/pub/irs-pdf/f8282.pdf). The charity should send you a copy of this form for your records when you make a car donation.

Get your tax deduction for an auto donation.

You can deduct your contributions only in the year you actually make them in cash or in other property. Claim a deduction and file Form 8283 with your tax return for the year you contribute the property. For legal purposes, the date of donation is the date on which you endorse the donation paperwork, for example the date on which you sign over your title or odometer statement. Also remember that you must itemize the tax return in order to claim a tax deduction.

Timing your car donation is everything!

The timing of your auto donation is critical. All charitable gifts must be made in the tax year for which you are filing the return. To claim a donated auto on your 2005 tax return (due next April 15), you must give it and all supporting documentation to a charity by this coming December 31. If you donate after December 31 of this year, the donation can be deducted for the NEXT tax year.

Valuing a non-operational car donation requires different standards.

The Kelley Blue Book or any other published reference for valuing used cars is generally invalid for determining the amount of an itemized contribution if the car does not operate. You may want to enlist a professional appraiser to determine its value, which may be only the sum of its working parts.

File Form 8283 if the sum of your non-cash donations in a year is greater than $500.

If you claim a deduction on your return of over $500 for all contributed property, you must attach a Form 8283 (PDF), Non-cash Charitable Contributions, to your return. If you claim a total deduction of $5,000 or less for all contributed property, you need only complete Section A of Form 8283. If you claim a deduction of more than $5,000 for an item or group of similar items, you need to complete Section B of Form 8283, which requires a qualified appraisal by a professional appraiser.

Special rules about tax deductions for car donations took effect January 1, 2005.

Qualified organizations that receive vehicle donations after December 31, 2004, must give the donor a written acknowledgement of the donation if the claimed value of the donated vehicle is more than $500. The acknowledgement must include the donor's name and taxpayer identification number (TIN), the vehicle identification number (VIN), a statement certifying the organization sold the car in an “arm's length” transaction between unrelated parties, the gross proceeds from the sale, a statement that the donor's charitable contribution deduction may not be more than the gross proceeds from the sale, and the date of the contribution. This acknowledgement must be provided within 30 days of the sale of the car. The organization also must provide this information to the IRS.

There are some variations to the acknowledgment if the charitable organization improved or otherwise used or altered the vehicle prior to selling it.

If there was significant intervening use of or material improvement to the car by the organization, the acknowledgement does not have to include the statement certifying the organization sold the car in an “arm's length” transaction between unrelated parties, the gross proceeds from the sale, or a statement that the donor's charitable contribution deduction may not be more than the gross proceeds from the sale. Instead, it must contain a certification of the intended use of or material improvement to the car and the intended duration of that use, as well as a certification that the vehicle will not be transferred in exchange for money, other property, or services before completion of that use or improvement. This acknowledgement must be provided within 30 days of the contribution. The organization also must provide this information to the IRS.

Itemize your tax deductions to get the tax benefit from your vehicle donation.

You can deduct contributions to charity only if you itemize deductions on your Schedule A of Form 1040. You must take into account certain limitations on charitable contribution deductions. For example, your deduction cannot exceed 50% of your adjusted gross income. Other limitations may apply. Publication 526, Charitable Contributions, provides detailed information on claiming deductions and the deduction limits. It also describes the types of organizations that are qualified to receive tax deductible contributions. Publication 526 is available online at www.irs.gov or by calling (800) 829-3676 (toll-free).

Read the IRS Publication 526: Charitable Contributions for more information on fair market value and deductions.

For information about determining the "fair market value" of a vehicle you can read "Publication 526 Charitable Contributions" at http://www.irs.gov/pub/irs-pdf/p526.pdf. You should read the entire publication. Be sure to read the section entitled "Contribution of Property" and a section called "Determining Fair Market Value." Another section called "Cars, boats, and aircraft" will help you in situations of donating these types of properties. Another helpful IRS document is Publication 561, entitled, "Publication 561 Determining the Value of Donated Property," located at: http://www.irs.gov/pub/irs-pdf/p561.pdf.

Take a photograph of your auto donation.

Keep as many records as you can to support your tax deductible vehicle donation. Once you have determined the vehicle's fair market value, make sure you can back it up. Take a photo of your car so you can show the IRS its condition at the time of donation. To be thorough, include exterior shots, interior shots, and a photograph of the odometer reading. For even more validation of the donation, use your camera's time and date stamp feature.

Make sure the organization to which you want to donate is IRS-Qualified, usually a 501(c)(3).

If you are eligible to deduct charitable contributions for federal income tax purposes and you want to claim a deduction for donating your car to charity, then you should make certain that the charity is a qualified organization. Otherwise, your donation will not be tax deductible. The most common types of qualified organizations are section 501(c)(3) organizations, such as charitable, educational, or religious organizations.

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?

How do I arrange a car donation in Colorado?

What charities may I give to that operate in Colorado?

How do I arrange a car donation in Connecticut?

How do I arrange a car donation in Florida?

What charities may I give to that operate in Florida?

How do I arrange a car donation in Georgia?

How do I arrange a car donation in Hawaii?

How do I arrange a car donation in Illinois?

What charities may I give to that operate in Illinois?

How do I arrange a car donation in Indiana?

How do I arrange a car donation in Louisiana?

How do I arrange a car donation in Maryland?

What charities may I give to that operate in Maryland?

How do I arrange a car donation in Massachusetts?

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?

How do I arrange a car donation in New York?

What charities may I give to that operate in New York?

How do I arrange a car donation in North Carolina?

How do I arrange a car donation in Ohio?

How do I arrange a car donation in Oregon?

How do I arrange a car donation in Pennsylvania?

How do I arrange a car donation in Texas?

What charities may I give to that operate in Texas?

How do I arrange a car donation in Washington State?

How do I arrange a car donation in Washington DC?

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

Q. 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.
A. Click for the Answer

Q. what percentage of a donated vehicle may I right off? does the tax bracket I fall in impact the amount of the right off?
A. Click for the Answer

Q. 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.
A. Click for the Answer

Q. where can i get a handicap place card for my car? it hangs in rear view mirror. thanks
A. Click for the Answer

Q. Does the vehicle need to pass a smog check in order to donate it?
A. Click for the Answer





Not finding the advice and tips you need on this Car Donation Tip Site? Request a Tip Now!


Guru Spotlight
Lynda Moultry