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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The Internal Revenue Service and state charity officials issued a consumer alert recently to help taxpayers avoid potential pitfalls when they donate their automobiles to charities.

Source: http://www.futurefocus.net/news/newsjan02.htm

Across the nation, an increasing number of charities have turned to car-donation programs in recent years as an effective way to raise money. Many of these charities run sound programs. But IRS and state officials are concerned that, as the end of the tax year approaches and taxpayers finalize their charitable donations, many may not know enough about the state and federal recordkeeping and filing requirements.

"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." State officials have additional concerns about car donation programs, stemming from their mandate to safeguard charitable assets and to prevent deceptive donation practices

• CHECK THAT THE ORGANIZATION IS QUALIFIED -Taxpayers must make certain that they contribute their car to an eligible organization; otherwise, their donation will not be tax deductible. Taxpayers can use the IRS Web site to check that an organization is qualified by searching Publication 78 at www.irs.gov/bus_info/eo/eosearch.html.
• EXAMINE STATE FILINGS FOR MORE INFORMATION -- Taxpayers can also review the organization's state registration and financial filings. These documents are commonly filed with a state charity regulator such as the State Attorney General's Office or the Secretary of State's Office.
• ASK QUESTIONS ABOUT HOW THE DONATED VEHICLE WILL BE USED -- Many donors also want to make sure their contribution is used for the charitable purpose they intend. Ask whether those soliciting the car donation are officials of the charity itself or a private fundraiser acting on the charity's behalf. If it is a private fundraiser, what will it do with the vehicle? Will the car be fixed up and given to the poor and needy? Or will it be resold? And if it is resold, what share of the proceeds go to the charity?
• 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.
• DOCUMENT THE CHARITABLE CONTRIBUTION DEDUCTION -- For vehicle donations, taxpayers must document the car donation and its fair market value.
• CONTACT STATE CHARITY AND IRS OFFICIALS WHEN IN DOUBT -- Donors with questions about whether a contribution is deductible should call the IRS at 1-800-829-1040 or for TTY/TDD help, call 1-800-829-4059. They can also find IRS forms and publications at the IRS Web site at http://www.irs.gov/bus_info/eo/index.html.