A vehicle donation can be a great way to get a deduction on your taxes. Thanks to new tax law that went into effect in January 2005, the IRS has simplified the process by taking the guesswork out of determining the value of your vehicle.
As of January 2005, you may deduct the full price we receive for the sale of your vehicle. This greatly simplifies the process for you, the donor, because you no longer have to research and come up with an estimate of the fair market value of the vehicle.
This also eliminates the risk of you getting into trouble by overstating the value of your deduction on your tax return. You’ll know exactly the amount you may deduct, eliminating guesswork. This saves you both time and risk.
The IRS allows you, the taxpayer, to claim a tax deduction of
As of January 2005, you may deduct the full price we receive for the sale of your vehicle. This greatly simplifies the process for you, the donor, because you no longer have to research and come up with an estimate of the fair market value of the vehicle.
This also eliminates the risk of you getting into trouble by overstating the value of your deduction on your tax return. You’ll know exactly the amount you may deduct, eliminating guesswork. This saves you both time and risk.
The IRS allows you, the taxpayer, to claim a tax deduction of
- a) The value of your vehicle up to $500 or
- b) If we sell the vehicle for more than $500, we will mail you a notification stating the exact amount for which it sold, which is the value you state for your tax purposes.
- c) Fair market value in some cases for certain vehicles. For example, late model cars or vans that end up being used to further the work of our charity OR vehicles on which we make a significant material improvement such as a major repair, before selling it. ( * See more on this option below.)
In any case, you will receive a receipt at the time that your vehicle is picked up.
Assuming that we sell your vehicle for more than $500, we will then mail you a notification stating that value for your tax purposes. So for any vehicle sold for more than $500, the exact amount it is sold for will be stated on your notification mailed to you, which in turn will be your tax deduction.
Please feel free to contact our Car Donation department at Family Care Foundation at 1-800-992-2383 with any questions you may have.
Assuming that we sell your vehicle for more than $500, we will then mail you a notification stating that value for your tax purposes. So for any vehicle sold for more than $500, the exact amount it is sold for will be stated on your notification mailed to you, which in turn will be your tax deduction.
Please feel free to contact our Car Donation department at Family Care Foundation at 1-800-992-2383 with any questions you may have.
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* Excerpt from IRS publication 4302, A Charity’s Guide to Car Donations:
“If a charity intends to make significant intervening use of or materially improve the car, the donor generally can deduct its fair market value.
“Significant intervening use means that a charity must actually use the car to substantially further its regularly conducted activities, and the use must be considerable. There is no significant intervening use if the charity’s use is incidental or not intended at the time of the contribution.
“Material improvement includes a major repair or improvement that results in a significant increase in the car’s value. Cleaning, minor repairs, and routine maintenance are not material improvements.
“The charity must provide the donor with a contemporaneous written acknowledgement of the donation. Without an acknowledgement, the donor cannot deduct the contribution.”
(end of excerpt from IRS publication 4302, A Charity’s Guide to Car Donations)
“If a charity intends to make significant intervening use of or materially improve the car, the donor generally can deduct its fair market value.
“Significant intervening use means that a charity must actually use the car to substantially further its regularly conducted activities, and the use must be considerable. There is no significant intervening use if the charity’s use is incidental or not intended at the time of the contribution.
“Material improvement includes a major repair or improvement that results in a significant increase in the car’s value. Cleaning, minor repairs, and routine maintenance are not material improvements.
“The charity must provide the donor with a contemporaneous written acknowledgement of the donation. Without an acknowledgement, the donor cannot deduct the contribution.”
(end of excerpt from IRS publication 4302, A Charity’s Guide to Car Donations)
Contributions of Property and Fair Market Value:
If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. 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. (From Itemized Deductions/Standard Deductions)
Determining Fair Market Value:
Cars, boats, and aircraft: 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 for $750. You can deduct $750, the true fair market value of the car, as a charitable contribution.
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 for $750. You can deduct $750, the true fair market value of the car, as a charitable contribution.
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