Stop Leaving Money On The Table With These Essential Car Donation Tax Tips

If you follow the IRS rules and donate to a suitable charity, you are entitled to tax-deductions when you donate a car. Here are the steps you need to follow for a trouble-free donation.

Step 1 - Get your car valued

The IRS will not accept a ‘blue book’ valuation for a car donation. Your valuation needs to be based on a fair market valuation, and it’s best to think of that as what you could realistically sell your car for. If you can get a valuation of this kind in writing, this is ideal as back up should the IRS challenge your valuation (note that for cars worth less than $250 you do not need this).

Step 2 - Check out what charity you want to donate to

You need to donate your car to a qualified organization that can accept tax-deductible car donations (or indeed tax-deductible donations of any kind). You can call the IRS for help if you are in any doubt. Once you know you have found the right charity and are ready to make the donation, make sure you keep a written record from the charity of the donation you have made.

Step 3 - Make sure you relinquish any liability for the vehicle

The rules surrounding this vary according to state law, but the cleanest and safest way to relinquish any liability for the vehicle is to transfer the car title across to the charity. There’s no reason not to do this if you’re donating a car right? So our advice is just go ahead and take care of it when you make the donation.

Step 4 - Include the tax-deductible car donation claim when you file your taxes

There’s a field on your tax form to include tax-deductible donations. You need to itemize your car donation. Please note that the value of your donation can’t exceed 50% of your adjusted gross income, though this is unlikely. Again call the IRS for clarification if you are in any doubt.