Tax Deduction Rules for a Car Donation
- Donating a car can reduce tax liability.A young woman holding a pen, doing her taxes image by Christopher Meder from Fotolia.com
The Internal Revenue Service allows for a deduction for charitable donations. The charitable donation must be to a qualified charity or else the donation is only a gift. Normally, the car does not need to be appraised but will need appraisal if the taxpayer is valuing the car at more than $5,000. - Itemize deductions. The value of a donated a car is only deductible if the person donating the car itemizes their deductions. If the taxpayer takes a standard deduction, then the car is not deductible.
- Get it in writing. If the car is worth more than $250, the charity must provide the taxpayer with a written acknowledgement. The acknowledgement must have the name of the charity, the date of the donation, a description of the car and either that no goods or services were received for the car, or the value of the car, or the only thing received for the car was intangible benefits.
- Get the right forms. If the car value is between $250 and $5,000 then the taxpayer must file Form 8283 Section A. If the car is valued at more than $5,000, the taxpayer must file Form 8283 Section B and include a written appraisal of the car's worth.
