Donating a Car to Charity and Getting a Tax Deduction

If you have a used car you want to donate to a charity and are wondering if you can deduct the donation on your tax return, then here are the steps you need to take.

First, make sure the charity you want to donate to is a qualified organization.  You will need to make sure that they are 501(c)(3) and can do so by calling the IRS at 877-829-5500 if you have any doubts.

You also must itemize deductions on your personal tax return by filing Schedule A.  If you are not a Schedule A filer, but instead take the Standard Deduction, then you cannot deduct the donation of the car.

Next comes the amount you are able to deduct for the donation.  This depends on what the charity plans to do with the vehicle.  If the charity sells the vehicle (as they generally do) then your deduction is limited to the gross proceeds of the sale.  So if you donate your car and the charity sells it for $500, then that is your deduction.  This is the case even if you think the fair market value of the car is higher.  You will also need to get a written statement from the charity with your information on it and a statement saying they sold the car and how much they sold it for.  This is true for any car that is sold for more than $500.

If your donation is worth more than $5000 then a written appraisel will be necessary and it will need to be attached to your tax return.

If you have any questions about donating an automobile to charity then it is best to consult your tax advisor for advice on your particular situation.

 

Jessica Chisholm, CPA
Seattle/Bellevue Tax Accountants
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Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. Since 2002, he has owned his own small business, Huddleston Tax CPAs. He is a graduate of Washington State University and the University of Washington School of Law.

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Huddleston Tax CPAs of Seattle & Bellevue
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Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching, Quickbooks consulting, bookkeeping, payroll and business valuation services for small business. We serve Seattle, Bellevue, Redmond, Tacoma, Everett, Kent, Kirkland, Bothell, Lynnwood, Mill Creek, Shoreline, Kenmore, Lake Forest Park, Mountlake Terrace, Renton, Tukwila, Federal Way, Burien, Seatac, Mercer Island, West Seattle, Auburn, Snohomish and Mukilteo. We have a few meeting locations. Call to meet John Huddleston, J.D., LL.M., CPA, Tawni Berg, CPA, Jennifer Zhou, CPA, Jessica Chisholm, CPA or Chuck McClure, CPA. Member WSCPA.