Why Donate Your Vehicle Series: Receive a Top Tax Deduction
Enjoy Significant Tax Savings by Donating Your Car to Charity
Planning to part ways with your old car? What if we told you that disposing of that vehicle can entitle you to claim a top tax deduction in the next tax season? All you have to do is donate that car to an IRS-approved 501(c)(3) nonprofit organization of your choice. Keep reading to learn the ins and outs of claiming a tax deduction for your vehicle donation.
How Is This Done?
If you’ve made up your mind to donate your unwanted vehicle to charity, the first thing you need to do is find a reputable IRS-approved 501(c)(3) nonprofit in your area that accepts car donations. Many such nonprofits will gladly take your car off your hands. However, it’s important to do some research and choose a charity that’s trustworthy and transparent in the way it uses the vehicles it receives from donors.
Depending on the charity you choose, you might need to fill out some paperwork to transfer ownership of your car to the charity. Some organizations working for nonprofits handle the paperwork themselves to make the donation process easier for donors.
The nonprofit will sell the vehicle you donated through an auction. Once the sale is made, it will send you your car’s tax-deductible sales receipt. You’ll need this document to claim your tax write-off in the next tax season.
How Much Tax Deduction You Can Claim?
Donating your car to charity can result in significant tax savings if you include it in your charitable contribution deduction when you file your itemized tax return.
However, since you can only claim a deduction for your car donation if you itemize, the total of all your eligible deductions needs to exceed the standard deduction amount for your filing status.
The tax deduction for a vehicle the charity sells is limited to the vehicle’s sales price. For example, if the charity sells your car at auction for $3,000, your deduction is limited to $3,000, even if the fair market value of your vehicle is more than that.
However, if the sales price of your donated vehicle is less than $500, you can deduct $500 or your car’s fair market value, whichever is less.
If the charity sells your car at a significant discount or keeps the car for its own use, then you can claim a deduction for the car’s fair market value.
Charities are typically required to report the sales price of your car to you on Form 1098-C.
To estimate your car’s fair market value to calculate your tax deduction, you may use a reputable used-car price guide such as the Kelley Blue Book online tool. Search the private party prices for your vehicle based on its make, model, and overall condition.
To claim a tax deduction for your donated car, you need to have documentation of your donation, which the charity will give you. Keep in mind that if the charity sells your car for more than $500, you’ll need to include additional paperwork with your tax return as follows:
- You need to complete Form 8283 if your car donation deduction is more than $500.
- If your deduction is between $501 and $5,000, you need to complete Section A.
- If your deduction is greater than $5,000, you need to complete Section B.
- If you complete Section B, you’ll also need a written appraisal as documentation.
In general, donating your car can result in a significant tax benefit that can help offset the cost of a new car or other expenses.
But beyond the tax benefits, donating your car is simply a fulfilling experience. It’s a great way to support a cause that’s close to your heart. Plus, it can make a real impact on the lives of others. So, if you’ve been meaning to dispose of your old car, consider donating it to charity. You’ll be doing yourself and others a huge favor.
Receive a Top Tax Deduction by Choosing Goodwill as Your Donation Partner
All Goodwill chapters across America are IRS-certified 501(c)(3) nonprofits. In other words, you’re guaranteed the right to claim a healthy tax deduction when you donate to Goodwill Car Donations.
Our team will have your car auctioned off, with the proceeds going straight to your local Goodwill organizations. These IRS-certified 501(c)(3) nonprofits cater to disadvantaged Americans — those who are burdened with disabilities, lack of education, essential skills, or job experience, and other limiting personal issues, such as being a former inmate or having a welfare mentality.
Your local Goodwill organizations use the funding we give them to provide their beneficiaries with job and skills training, employment opportunities, scholarships, livelihood assistance, disability benefits, family support, educational services, financial assistance, and many other essential support services.
Expect to receive the 100% tax-deductible sales receipt of your car by mail soon after your vehicle’s auction. You’ll need it to claim your top tax deduction in the next tax season.
Moreover, we’ll provide you with our free towing service at a date and place most convenient to you anywhere in the country.
Your gift will also allow you to savor the satisfaction of serving your community by helping empower your less fortunate neighbors.
We accept nearly all vehicle types, even those that are no longer working.
For more information about our vehicle donation program, including our quick and easy donation process, feel free to check out our FAQs page. If you have questions or concerns, call us anytime through our toll-free hotline at 866-233-8586 or leave us a message here.Photo by olia danilevich under Pexels License
Looking Forward to a Hefty Tax Deduction?
If you think the car you’re donating will fetch a good price at auction, which you can then claim as your tax deduction, then go ahead and begin your car donation process with us! While you enjoy your tax savings, you’ll also feel proud for doing something that will benefit the less fortunate folks in your community. Call Goodwill Car Donations at 866-233-8586 or fill out our secure online donation form now!