Car Donation Tax Deduction: IRS Rules Explained

The basics

• You can only deduct donations if you itemize deductions on your tax return.
• The charity must be a qualified organization. Check it with the IRS Tax Exempt Organization Search.
• Keep written proof of the donation and what the charity did with the car.

The $500 rule

If you claim a deduction of more than $500, your deduction is generally limited to the gross proceeds the charity receives when it sells the car. The charity will report this to you on Form 1098-C, usually within 30 days of the sale.

You may be able to deduct the car's fair market value instead if the charity:

• makes significant use of the car in its work (for example, delivering services),
• makes material improvements to the car before selling it, or
• gives or sells the car at well below market value to a person in need as part of its charitable purpose.

If the claimed value is $500 or less, you can generally deduct the lesser of fair market value or $500 without the sale-price limit.

Forms you may need

• Form 1098-C from the charity (attach Copy B to your return when required)
• Form 8283 for noncash donations over $500
• A qualified appraisal in some cases where you claim more than $5,000 under an exception

See IRS Publication 4303, A Donor's Guide to Vehicle Donation, and Publication 526 for details.

Paperwork checklist when you hand over the car

• Sign the title over to the charity correctly (not left blank)
• Remove your license plates if your state requires it
• File a notice of transfer or release of liability with your DMV
• Cancel insurance and registration after the transfer
• Keep copies of everything

Ready to give? Use our car donation form.

Frequently asked questions

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