Tax Deduction for Car Donation

As a taxpayer, you will get a tax deduction in the calendar year that you donate your car. The Internal Revenue Service allows you to deduct the value of your donated car up to $500.

If the amount of your deduction for your car donation is more then $500, you must file the IRS Form 8283: Non-cash Charitable Contributions with your itemized tax return. Then mail a copy of the form to the charity where you donated your car. If you claim less than $5000, you need to fill out only section A of Form 8283. For a deduction greater than $5,000 you will need to fill out section B and also get an appraisal of your car's value.

For vehicles donated after December 31st, 2004, make sure you are familiar with the new rules that apply as a  result of the American Jobs Creation Act of 2004. If you are claiming a deduction greater than $500 and the car is sold by the charitable organization, you are only allowed to deduct the amount of the gross sales.

Here's an excerpt from the IRS website:

"Under the new rules, the charitable organization must provide an acknowledgement to the donor within 30 days of the sale stating the amount of gross proceeds. Alternatively, if the charity significantly uses or materially improves the vehicles, the charity must certify this intended use and duration and provide an acknowledgement to the donor within 30 days of the contribution. If the charity significantly uses or materially improves the vehicle, generally, the donor may deduct the vehicle’s market value."

For more information, please read the following news release on the IRS website.

IRS Publication 4303: A Donor's Guide to Car Donations"