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Tax Deduction When Donating Your Old Car

IRS 1040 tax form with pen.The IRS has rules that allow a deduction for donating a vehicle. These rules are easy to follow if you take the time to read the publications that the IRS make available. You'll find most of the deduction guidelines in our donation information, however, the IRS does make changes from time to time, so check for these at tax time. Most online tax software services keep current on vehicle donations and have questionnaires designed to get you the best qualified deduction for your donation. If you use these services or an accountant, then just make sure you get the proper documentation at the time you turn over the vehicle title.

Is Donating all about the tax savings?

Donating is to help a good cause. It's not to make money, it's for the gratification of doing good. If a car is valued at $1850.00 and you are in a 28% tax bracket the effective tax savings is $518.00, less than you could have gotten by selling the car yourself.

Old rusted car out behind the house.The overwhelming percentage of people who make donations of any type believe the importance is in doing something that directly benefits the community. Feeling gratification from giving to charity is liberating and all religions preach giving and helping the needy. It's gratifying and lightens the spirit and many people say that when they reduce some of their belongings it makes them feel better. Too many processions just weigh you down. In the South and Midwest you see old cars abandoned at the side or back of the property with grass and weeds growing up around them. As a matter of fact, you can see this scene in just about any state of the USA. If most cases many of these owners never realized how easy it is to have the car picked up for donation, and if they did they might have donated that old car years ago. Now that they are learning how they can do this simply without a hassle, maybe there will be a few less old vehicles rusting away in America.

Proper Title Paperwork

Couple completing paperwork after making a car donation. 

When you donate your older car to charity you'll need to have the title proving ownership. Most states have titles that are easy to endorse over to another party and have explicit places defined where the owner/seller should sign. If you have questions, most organizations that will be taking the car do these transactions all the time and know where and how you should sign. Do make sure that you do not only endorse the title, but make sure the recipient is listed. Additionally, remember to remove license plates and any items in the car, including the trunk and glove compartment.

Written Confirmation

When you donate you should receive written acknowledgment from the charity that you are making the donation to and it should include the following:

  • Your name and taxpayer identification number.
  • The vehicle identification number (VIN).
  • The date of the contribution.
  • And one of the following:
    • A statement that no goods or services were provided by the charity in return for the donation, if that was the case, or
    • a description and good faith estimate of the value of goods or services, if any, that the charity provided in return for the donation, or
    • a statement that goods or services provided by the charity consisted entirely of intangible religious benefits, if that was the case.

Note: If the acknowledgment does not contain all required information, the deduction may not exceed $500.

Donating the Right Way; Simple, Easy, & Care-Free

Young man showing key of old car that he donated.Donations of vehicles can be easy and much less complicated than selling or trying to dispose of them in traditional means. However, do your homework and make sure that you understand the process of donating. If a tax credit is important, than follow the IRS guidelines so your deduction meets their rules. A few publications, one of which is the IRS's "A Donor’s Guide to Vehicle Donations" tells you what you need to know. So download it and review it, as it's just a few pages and very much to the point and will answer many of the questions that you have. Making an older car donation has really become an easy process with many companies taking care of the logistics. Just give your charity a call and tell them that you have a car you wish to donate. After a few questions and a couple of days chances are their will be a flat bed truck outside in front of the vehicle ready to take it away.

All non-profits are not equal. Make Sure Your Intended Organization is a 501(c)(3) or a qualified religious organization. Donations to 501(c)(4) organizations are generally not tax-deductible, as they are political organizations with permission to lobby government.

Donate Your Car Directly to the Charity of your Choice

Pick up the phone and speak directly.We offer you direct contact to NPR (National Public Radio) or a recommended local charity, each having donation programs for cars and vehicles.

Car Talk Vehicle Donation Program

Find a Charity in Your State