Car Donation Tax Deduction – How To Get The Maximum Tax Benefit Out Of Your Vehicle Donation
Donating your car or vehicle to charity can be a great way to get a 2021 federal tax deduction (state income tax deductibility depends on state law), and Wheels For Wishes makes it easy. If you would like to help your local Make-A-Wish® and get the maximum tax deduction, then you’re already almost done. It’s as simple as filling out the little form to the right or calling 1-855-278-9474. We make the process easy, and you get the most good (and highest tax deduction) for your car. Not only that, but you are also helping a local child’s wish come true.
how car donation tax deduction works
Prior to January 2005, the IRS was allowing people who donated to a qualified car donation program to take a tax deduction based on their vehicle’s market value no matter how much or how little the vehicle sold for. Determining the market value of a donated vehicle is often quite difficult and time-consuming, which made determination of the amount of the tax deduction confusing. Fortunately, as a result of the new tax law that went into effect in January 2005, the IRS has taken the guesswork out of determining the value of your donated car, truck, RV, boat or other vehicle.
The IRS allows the taxpayer to claim a charitable tax deduction as follows:
- We make it easy to get the maximum tax deduction for your vehicle donation! Simply filling out the quick form to the right (or call 1-855-278-9474) and we take care of the rest. Your vehicle is picked up, sold, and proceeds benefit your local Make-A-Wish®, but you also get a 100% deductible receipt.
- If the donated vehicle is sold for less than $500, you can claim the fair market value of your vehicle up to $500 or the amount it is sold for if less than fair market value.
- If the donated vehicle sells for more than $500, you can claim the exact amount for which the vehicle is sold.
For any vehicle sold for more than $500, the exact amount it is sold for will be stated on your notification mailed to you, which in turn will be your charitable tax deduction. For additional information, the IRS provides A Donor’s Guide to Car Donations (Publication 4303 linked below), which details the determination of the value of your donated vehicle. As always, we help people donate their cars every day, and we would be happy to help you do the same. Feel free to call us at 1-855-278-9474 with any questions you might have and one of our representatives will help you.
Four Simple Categories For A Car Donation:
A tax write off for a car donation is a way that you can get money back from your taxes for the non-cash charitable donation of a motor vehicle.
- In most cases, donated vehicles that sell for less than $500 are able to be claimed at the fair market value up to $500 without filling out any extra paperwork.
- If your donated car sells for more than $500, you will be able to claim the exact amount for which your vehicle sold with a 1098-c form or a 8283 form. The Form 1098 C is specifically for motor vehicles, the Form 8283 is for general property. Both can be used to file for a car donation.
- If you are looking for a car donation tax credit of over $500 but less than $5,000 you’ll have to fill out a 1098-c form or a 8283 IRS Form for a non-cash charitable contribution. A tax deduction for a donated car is a simple step within the document in section A of the 8283.
- A car donation tax credit for over $5,000 will need a 1098-c form or a 8283 form with a written appraisal. You can find this simple step within section B of the 8283 IRS Form for non-cash charitable contributions.
According to the American Jobs Creation Act of 2004 there are specific documents and record keeping required when donating non-cash items. Here is a chart to help you with the filing of your car donation tax write off:
Image Source: https://www.irs.gov/pub/irs-pdf/p4303.pdf
How To Get Your Tax Deduction For A Car Donation:
- Set up a car donation with an IRS registered 501(c)(3) charity of your choice. With Wheels For Wishes all you need to do is fill out an online donation form or call us at 1-855-278-9474 and we’ll do the rest for you!
- Depending on the State, a title may be needed to complete the donation process. Click here to find out more about your State’s title laws.
- When your donation process is complete, request a receipt from the charity program. With Wheels For Wishes your receipt is automatically sent to you.
- When you receive your car donation receipt hold onto it for next year’s taxes.
- When you are filing your taxes in 2021 for last year’s car donation all you have to do is fill out a Form 1098 C and attach it to your federal tax return. The Form 1098 C is specifically for motor vehicles, the Form 8283 form is for general property. Both can be used to file for a car donation.
Frequently Asked Car Donation Tax Questions
Q:Will my vehicle donation be good for the year that I sent in the donation form, even if I don’t receive the receipt until the beginning of the New Year?
A: YES! IRS Publication 4303, “A Donor’s Guide To Vehicle Donations” states: “… the written acknowledgment must contain the date of the contribution…” The date of contribution is the date that we received the donation form. So it can even be on the 31st of December and will still allow a charitable vehicle deduction for that tax year.
Q:Does the donation count toward the year I submitted the online form even if the vehicle isn’t picked up until the new year?
A: YES! As stated above.
Q: Some charities offer vacation packages as incentives to donate. Does that affect my tax deduction?
A: YES! If a charity provides a commodity, like a vacation package, for example, in exchange for a car or vehicle donation, then the tax receipt from that charity must state the fair market value of that commodity and the fair market value of that commodity must be subtracted from the value of the car donation.
For example: If your vehicle sells for $1,000.00 at auction and your vacation package that you receive has a fair market value of $400.00, you can only deduct $600.00. That’s $1,000.00 for the donated car less $400.00 for the vacation package resulting in a maximum deduction of $600.00 ($1000.00 – $400.00 = $600.00)
We certainly do not want donors to be shocked by receiving a tax letter that states they have to subtract the fair market value of the vacation from the value of their vehicle.
Latest IRS Publications Concerning Vehicle Donations And Deductions
- IRS Pub. 526 – Charitable Contributions – An excerpt regarding non-cash charitable contributions
- IRS Pub. 561 – Determining the Value of Donated Property – An excerpt regarding fair market value
- IRS Pub. 4303 – A Donor’s Guide to Car Donation – An excerpt regarding new tax law information
Wheels For Wishes Is Ready To Help You Get That Tax Deduction
Wheels For Wishes is a car and vehicle donation program that works with local Make-A-Wish programs to get ‘wish’ kids’ wishes paid for. We believe that every child should have a great childhood, no matter their health situation. That is why we have donated over $78 Million to Make-A-Wish since 2010.
We are able to make a difference in children’s lives because of your car donations from across the United States. Not only are you helping children get a life-changing experience that they will remember for the rest of their lives but you are also getting tax deductions for car donations! Click here or call 1-855-278-9474 to start your car donation today!
How Exactly Is Wheels For Wishes A Legitimate Car Donation Program?
Wheels For Wishes is a 501(c)(3) organization with the IRS, which means that you get a tax right off for donating a car. Car donors can claim a tax deduction of the vehicle’s fair market value under these following situations:
- The non-profit charitable organization makes certain use of the car in charitable deeds. This is the category that Wheels For Wishes falls under.
- The charitable organization increases the value of the vehicle significantly through repairs (not just cleaning or painting).
- The charity donates or sells the vehicle to an individual in need for a very low (below market) price for the purpose of helping them with transportation.
Make sure to avoid scam car donation programs that are not a registered 501(c)(3) nonprofit organization. If you donate your car to a car donation program that is not registered as a charity with the IRS your car donation will not be tax deductible.
What Is The Best Organization To Donate A Car?
Wheels For Wishes has a great track record for donated vehicles! Trustpilot gives Wheels For Wishes an Excellent rating with over 4,100 reviews and counting. Just check out some of these reviews:
- “Excellent experience. Made the whole donation process a piece of cake. I am very thankful for that since I live nowhere near Memphis where the vehicle was donated.”
- “Smooth sailing from picking up the car to receiving receipt.”
- “This turn around in picking up my car was within 14 hours. They were on the ball and very efficient in sending us our donation receipt in the mail! A very smooth process! Highly recommend!!”
- “This is my family’s 3rd donation to this organization and we have had no problems.”
- “Our car donation process was easy and went smoothly. The car was picked up as scheduled and later when the car was sold at auction we received notice on the price it sold at for tax purposes. Great experience.”
With Wheels For Wishes, you’ll be donating a vehicle for tax write off in no time. So, how much tax credit do you get for donating a car? If you are still confused about just how much of a tax deduction you can receive for donating your vehicle just check out our tax deduction calculator for donating a car or visit the IRS website for more answers to any questions you may have on deductions for car donations.
How Do I Donate A Vehicle For Tax Deduction In 2021?
- Call 1-855-278-9474 or visit our online donation form.
- Next, we’ll arrange your free tow of almost any vehicle within 24 hours of the next business day.
- Finally, when the car donation process is complete, we’ll mail you your tax deductible receipt.
If your car is brand new, broken down, old, or just plain junky you can still receive a tax deduction when you donate your vehicle to Wheels For Wishes. To the “wish kids” of the Make-A-Wish Foundation, your car donation gives them a break from routine medical treatment and a life-changing experience that they can cherish for the rest of their lives.
Maximize your tax refund today by starting your online car donation form and make a difference in a child’s life. It will take less than a minute to fill out the donation form and a representative will get in touch with you in less than 24 hours of finishing the form. Your tax returns will thank you!
Proceeds from donated cars go to Wheels For Wishes, a tax-exempt charity under Section 501(c)(3) of the IRS Code, benefiting your local Make-A-Wish Foundation®. Since 2010, Wheels For Wishes has donated over $78 million toward granting over 9,000 wishes for local children dealing with critical illness.