Donate Auto Tax Deduction Information
automobile donation tax information

Truth is not everyone is eligible for a tax deduction when they donate an auto. This site provides actual information and references to assist the automobile donation process.

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Beware of False and Misleading Claims such as Huge Tax Deduction...

Beware of any of the following false or misleading claims...

• Huge Tax Deduction
• Maximum Deduction
• Full Fair Market Value
• Fully Tax Deductible
• Tax Credit

These statements give the impression that the charity can provide something special to that donor by using that charity.

They seem to say, "If you make your car donation to our charity you will receive __________," (which would be some sort of tax benefit that perhaps another charity cannot provide--This is misleading).

No charity can influence or declare how much tax benefit you will receive from a car donation.

All bona fide 501(c)(3) charities offer the exact same service to the auto donor. None can offer a higher tax deduction than another.

Following are some explanations of these false or misleading claims.

Huge Tax Deduction - Maximum Deduction - Full Fair Market Value

Above claims are very misleading! And Huge Tax Deduction claim is simply FALSE!

Not every one can even get a tax deduction. And certainly not everyone will get a "huge" tax deduction.

Your car donation tax deduction is based on the Actual Fair Market Value. You do not magically receive the "maximum deduction" or the "full fair market value." There is no such thing.

The IRS makes this quite clear in IRS Publication 526 and IRS Publication 561 (see our auto donation IRS information page) and in the following release:

IRS AND STATE CHARITY OFFICIALS URGE CARE WHEN MAKING A CAR DONATION

Source: http://www.irs.gov/pub/irs-news/ir01-112.pdf

Here are a few quotes from that news release:

“When done correctly, donating a used car to a charity can help both the charity and the taxpayer,” said IRS Commissioner Charles Rossotti. “We want people to take a few simple steps to avoid possible problems and to make sure they get the proper tax deduction for their donation. Don’t get taken for a ride.’’

And the following:

• "DEDUCT ONLY THE CAR’S FAIR MARKET VALUE – Some car donation program operators have mistakenly claimed that donors can take the full “Blue Book’’ value of their car for a deduction. The IRS, however, will only allow a deduction for the fair market value of the car. Fair market value takes into account many factors, including the vehicle’s condition. The fair market value of the taxpayer’s car may be substantially different from the “Blue Book” value.
  
  
• "CALCULATE THE FAIR MARKET VALUE – The donor must take many factors into consideration to establish the value of the car. Many used-car buying guides contain stepby- step instructions so that readers can make adjustments to the value of a car for accessories, mileage and other indicators of its general condition. Both IRS Publication 526, “Charitable Deductions,” and IRS Publication 561, “Determining the Value of Donated Property,” provide detailed instructions. Both publications can be found at www.irs.gov."
  

The Bold lettering (above) was added for emphasis.

Fully Tax Deductible -- Tax Credit

The statement "Fully Tax Deductible" is very misleading. The donation IS "fully tax deductible" for some people BUT NOT for everyone.

To be able to have any tax deduction the person must itemize their deductions. Less than 50 % of Americans itemize deductions.

Another quote from the above IRS Release:

• "ITEMIZE IN ORDER TO BENEFIT – Many taxpayers can’t take a deduction for car donations because they don’t itemize deductions on their personal tax return. For taxpayers, the decision to itemize is determined by whether their total itemized deductions are greater than the standard deduction (for 2001, the standard deduction will be $4,550 for single; $7,600 for married filing jointly). Less than one-third of the nearly 128 million individual taxpayers itemized in 1999, the last year for which complete data is available."

The statement that you will receive a "Tax Credit" is FALSE. There is no such thing as a tax credit for a car donation.

What is the True Data about an Auto Donation?

Your tax benefit from a car donation depends on the actual fair market value of your car donation taking into consideration all the factors about the car's condition, mileage and location. And it depends upon your individual tax situation, which is different from person to person.

If the true fair market value of the vehicle is likely to be in excess of $5000 then an independent professional appraisal must be done.

Throughout this website we do try to provide you with all of the true data.

Visit this web page to get some basic information about an auto donation and a tax deduction.