The maximum amount you can deduct on your income
tax return is the fair market value of your car. Fair market
value is the price a willing buyer would pay and a willing
seller would accept for the car, when neither party is
compelled to buy or sell, and both parties have reasonable
knowledge of the relevant facts.
Some fundraisers have mistakenly claimed that donors
can, in all cases, deduct the full value of their cars as
found in a used car guide (such as “blue book” value). A
used car guide may be a good starting point to value your
car, but you should exercise caution. The IRS will only
allow a deduction for the fair market value of the car,
which may be substantially less than the “blue book” value.
Example: You donate your car to the local high school
for use by students studying car repair. Your credit union
representative 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 only sell your
car for $750. Your charitable contribution deduction may
not exceed $750, the fair market value of the car.
For information on determining the value of your car,
see Publication 561, Determining the Value of Donated
Property. If you used your car in a trade or business, see
the rules for contributions of capital gain property in
Publication 526.
Recordkeeping and Filing Requirements
Depending on the amount you are claiming as a charitable
contribution deduction, you may need to get and
keep certain records and file an additional form to substantiate
your charitable contributions. See the chart
Recordkeeping and Filing Requirements that follows.
WRITTEN ACKNOWLEDGMENT FROM THE CHARITY –
You must obtain a contemporaneous written acknowledgment
from the charity if the total deduction you are
claiming for a donated car is $250 or more. The
acknowledgment must include the name of the charity,
a description (but not value) of your car, and one of the
following:
¦ a statement that no goods or services were provided by
the charity in return for the contribution, if that was the case,
¦ a description and good faith estimate of the value
of goods or services, if any, that the charity provided in
return for the contribution, or
¦ a statement that goods or services that the charity
provided in return for the contribution consisted entirely
of intangible religious benefits, if that was the case.
You must get the written acknowledgment on or
before the earlier of the date you file your return for
the year you make the contribution, or the due date,
including extensions, for filing the return. A charity can
provide either a paper copy of the acknowledgment to
the donor, or a charity can provide the acknowledgment
electronically, such as via e-mail addressed to the donor.
Do not attach the acknowledgment to your income tax
return; instead, retain it with your records to substantiate
your contribution.
FORM 8283, NONCASH CHARITABLE
CONTRIBUTIONS – Depending on the amount of the
deduction you claim for the car, you may have to file an
additional form with the IRS with your Form 1040. If
the deduction you are claiming for a donated car is greater
than $500, you must complete Section A of Form 8283.
If the deduction you are claiming is greater than $5,000,
you must get a written appraisal of your car (see Written
Appraisal below). You must also complete Section B
of Form 8283, which must include the signature of an
authorized official of the charity, and attach it to your return.
due date (including extensions) of the return on which
you first claim a deduction for the car. For a deduction
first claimed on an amended return, the appraisal must
be received before the date the amended return is filed.
When you file your income tax return (Form 1040 or
Form 1040X), you will need to complete Section B of
Form 8283, and attach it to your return.
If Section B is required and the charity sells or otherwise
disposes of a car within two years after the date of receipt,
the charity must file Form 8282, Donee Information
Return, with the IRS. On Form 8282, the charity reports
information identifying the donor and itself, and the
amount it received upon sale or other disposition of the
car. The charity must provide you with a copy of the form.
The chart below provides items of recordkeeping and
filing requirements, based on the amount you claim as
a deduction.
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