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.

Tax Information - Automobile Donation

For full discussion and information on a tax deduction for an automobile donation visit this webpage.

Each of the following Donate Auto Tax Deduction FAQs are answered in detail below.

We wish to assist you in better understanding the donation process.

1. What constitutes a legitimate donated auto tax receipt?

2. Will you give me the highest possible value for my donated auto on my tax receipt?

3. Does the fair market value of donated autos get deducted from the taxes owed at the end of the year?

4. If the fair market value of my donated auto is $3,000.00, how much of that figure is deducted from the income taxes that I owe?

5. My old Honda Accord has a Kelly Blue Book wholesale value of $2,100.00 and a suggested retail value of $3,950.00, but it needs a new traney. Can I take an average of the two values and deduct the cost of a new transmission to determine the Honda's fair market value?

6. I do not itemize on my tax returns. Can I still benefit from an auto donation?

7. I have not itemized in the past but if I donate my auto, I might itemize. Would it be worth it for me to itemize?

8. My used auto might be old but it's worth money and I don't want to go to all the trouble of selling it or get cheated with a trade-in. I don't itemize, what can I do?

9. Does the new tax law affect how much I can deduct on my 2005 income tax return?

Tax Deduction FAQs

1. What constitutes a legitimate donated auto tax receipt?

The auto tax receipt you will receive will be legitimate, and will contain all of a vehicle tax receipt's necessary elements.

The elements of a legitimate donated auto tax receipt are: the charity's name; its Federal Tax ID number; the donor's name; date of donation; and, the year, make and model of the donated auto.

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2. Will you give me the highest possible value for my donated auto on my tax receipt?

The responsibility for determining the fair market value of your auto rests with you, the owner. However, it is usually very simple to find out the fair market value.

The fair market value is rather easy to determine. When you send in your donation form we send you simple instructions that will assist you to determine its fair market value.

If you are placing a fair market value of $5,000.00 or more on your auto, please mention that when you send in your donation form so we can arrange for the IRS required appraisal from a certified professional auto appraiser. If we feel that your auto is more valuable than $5,000.00 then we will arrange and pay for the appraisal.

For more information about determining the "fair market value" of a vehicle visit our Fair Market Value page.

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3. Does the fair market value of donated auto get deducted from the taxes owed at the end of the year?

No. What you are referring to is a tax credit. Tax credits have not existed since the Kennedy administration and were Investment Tax Credits. Such credits were designed to stimulate investments by business in capital goods and equipment by allowing a percentage of the purchase price as a credit against taxes due and not merely as a deduction from taxable income.

However, the fair market value does reduce your total tax liability (the amount you owe) assuming you are in a position where you can claim a tax deduction for a charitable contribution.

Not everyone can do this. You have to "itemize" deductions. If you file a 1040 Short Form you are not itemizing deductions. If you are in question as to whether or not you itemize deductions please ask the person that does your tax return each year. He/she will know.

If you do not itemize you can still get free pickup and valuable benefits using the recycling program. Click here for information about valuable benefits you can receive using the recycling program.

Click here for the IRS Information page.

4. If the fair market value of my donated auto is $3,000.00, how much of that figure is deducted from the income taxes that I owe?

This is a tiny bit complicated, so if you do not understand it please ask your tax advisor or tax preparer.

A percentage of your $3,000.00 donation gets deducted from your taxable income.

The actual amount of taxes you save will be determined by your tax bracket. If you are in the 30% tax bracket, for example, then your actual tax benefit would be $900.00 on your $3,000.00 donation. In other words, 30% of $3,000.

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5. My old Honda Accord has a Kelly Blue Book trade-in value of $2,100.00 and a suggested retail value of $3,950.00, but it needs a new traney. Can I take an average of the two values and deduct the cost of a new transmission to determine the Honda's fair market value?

No. The IRS considers a vehicle that doesn't run, or is not mechanically safe, to have a reduced fair market value. When determining the trade-in value at Kelley Blue Book you can get very specific about the condition of your auto. You can enter details about every aspect of your auto's condition. From that you will get an accurate trade-in value. The fair market value is usually somewhere between the trade-in value and the retail value. With a car that is not running it is very close to the trade-in value or could even be below that.

Find out more about determining the fair market value of your vehicle.

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6. I do not itemize on my tax returns. Can I still benefit from an auto donation?

No. You must itemize your deductions on your tax returns to receive a tax deduction for a vehicle donation.

However you can take advantage of our recycling program. Just fill out the online disposal form. You can still receive free pickup AND you can receive benefits that are in line with the actual fair market value of your auto.

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7. I have not itemized in the past but if I donate my auto, I might itemize. Would it be worth it for me to itemize?

To itemize, you'll have to file the 1040 Long Form and the process of itemizing is a bit complicated. If you have not itemized before and are now considering it, check with an accountant to determine if it would really pay you to itemize and if you can do so and receive a benefit. The IRS allows a "standard deduction" for individuals and married couples filing singly and jointly. If you itemize your deductions, to get a benefit from a donation, the total allowed itemized deductions have to be greater than the standard deduction you would normally receive.

If you do itemize then simply follow the instructions given at the online donate auto form. Fill out the form completely, choose tax receipt, and hit the Submit button at the bottom of the form.

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8. My used auto might be old but it's worth money and I don't want to go to all the trouble of selling it or get cheated with a trade-in. I don't itemize, what can I do?

The hassle free and no risk way to recycle your used auto is through the recycling program.

Since the recycling service is not a donation program, you will have no tax preparation complications. And you will receive valuable coupons, vacations and/or cruises, often worth more than tax breaks; and you can take your vacation/cruise now or when you choose. See Vacation/Cruises.

Learn more about the difference between the car donation program and the recycling program.

9. Does the new tax law affect how much I can deduct on my 2005 income tax return?

Thanks to the new tax law, the IRS has taken the guesswork out of how to determine the value of your vehicle.

Beginning January 1, 2005 you may deduct the full price we receive for the sale of your vehicle. This greatly simplifies the process for you in several ways:

If your vehicle sells for more than $500 you’ll know exactly the amount you may deduct, eliminating guesswork. Thus you no longer have to research and come up with an estimate of the fair market value of the vehicle.
This also eliminates the risk of you getting into trouble by overstating the value of your deduction on your tax return.
This saves you both time and risk.

Here is how it works:

Under the new law, if your vehicle sells for $500.00 or more at the dealer auction house, we are now required to send you a receipt containing the following information:

Your name and the VIN of your vehicle;
The fact the donation was "arms length", i.e. that we are not related to you in any way, family or business-wise;
The selling price of your vehicle becomes its fair market value.

This makes the entire procedure very simple for you. And eliminates any risk from the IRS.

If you car sells for less than $500.00 at auction, you may deduct what you consider as the fair market value of your vehicle, as long as that figure is under $500.00.

In this case, we will be sending you a less detailed tax receipt that simply acknowledges your donation (with your name, date of your donation, and the description of your vehicle).

Please fill out the Donate Auto Form to get started.

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