Navigating the waters of the car donation tax laws can be treacherous. Over the past 20 years, making a car donation to a charity has been a popular option for getting rid of old or unwanted cars. But, how much of a tax deduction are you able to recieve for your donation? Are all car donation charities the same?
The primary goal of most car donation organizations is to get you to hand over your vehicle to them, only to have them move it as quickly as possible in a wholesale environment. We, on the other hand, spend a great deal of time making repairs, professionally detailing your donated vehicle, and then researching the best retail venue, showcasing it with detailed photos, and making every effort to maximize your tax deduction.
Since every donated vehicle is different, it is crucial to know which advertising medium will yield the highest selling price and maximize the tax deduction for our donors. Retail classifieds such as Craig’s List, Ebay, and Auto Trader, are where we typically advertise your donated car, truck, van, RV, motorhome or boat. If we use an auction to sell your donated vehicle, we will thoroughly investigate vehicle values and make sure bid prices are in line with real world retail prices before accepting the highest bid. This insures the highest value possible for the write-off potential of our donors.
Overview of the Charity Car Donation Tax Law
Before 2004, a taxpayer could claim fair market value for any vehicle donated to charity up to $5,000, accompanied by a receipt from the charity, regardless of what the charity sold it for. No reporting requirement on behalf of the charity was required to submit IRS form 8282 once the vehicle was sold.
Anything over $5,000 required a receipt from the charity, along with IRS tax form 8283 and a third-party appraisal. The charity was required to submit IRS form 8282 once the vehicle was sold.
After tax year 2005, taxpayers could only claim up to $500 for any vehicle donated to charity, accompanied by a receipt from the charity, regardless of what the charity sells it for. But, a taxpayer can claim fair market value (usually determined by an evaluation guide such as kBB.com) if the charity materially improves the vehicle or uses the vehicle significantly.
A quick recap of the current vehicle donation tax law
- A taxpayer donates junk vehicle and gets $500 write-off.
- If taxpayer donates vehicle that charity sells for more than $500, donor gets to claim the sales price.
- If taxpayer donates vehicle and charity agrees to fix it or uses it, donor gets to claim fair market value.
So, don’t be tricked by other companies’ claims about receiving the highest value for your donation. If they are not selling your donated vehicle in a retail environment, they don’t have your best interests in mind.
In many cases we will invest our own funds to improve the quality of your vehicle, ultimately maximizing your write-off potential. Donate your car, truck, RV, motorhome or boat to help fight Prostate Cancer!