IRS Rules On Taking A Car Donation Tax Deduction

When it comes to taking a car donation tax deduction, the IRS has a few rules and regulations in place that you'll need to be aware of. This article will list the basics, but for more detailed information you should visit the IRS website and get the publications that we will list out below.

Qualifying For An Income Tax Deduction

The main requirement in the IRS has in place for deducting a charity car donation is that you must file an itemized return on Schedule A of your 1040.

Keep in mind that your deduction may not exceed 50% of your adjusted gross income. So, if your income was $40,000 you can take up to a $20,000 deduction on your car donation, provided that is what your car was actually worth.

Get A Written Receipt From The Charity

Although it seems obvious, be sure you get a written receipt from the charity or the charity service. This is necessary when your donated vehicle is valued at $250 and up.

Items to include are: charity name and donated vehicle description. The charity will also need to supply you with one of these 3 items as listed by the IRS:

• 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 valueof 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.

The required paperwork can be in the form of written paper copy or by email.

Car Donations Greater Than $500

If your car donation totals more than $500, you will need to fill out Section A of Form 8283 and send it off with your 1040 return when you file your taxes. It's a simple form that takes very little time to complete.

Car Donations Over $5,000

When your car donation is greater than $5,000, the IRS requires a written appraisal on the car being donated, along with a completed Section B of Form 8283. It's a little more involved, but well worth it for car donation tax deduction.