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What Should I Consider When Donating a Car?

By J. Beam
Updated May 17, 2024
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If you are considering donating a car to charity, there are a few aspects of the process you should be familiar with. As a tax deduction, donating a car may or may not make good financial sense. However, if you are truly interested in being charitable, then the tax deduction merely comes as an added bonus. Before donating a car, make sure you are dealing with a reputable donation service or qualified charity.

Numerous charities, from the National Kidney Foundation to the Vietnam Veterans, accept vehicle donations. The use of vehicles donated to charities varies from auction proceeds to gifts to the needy to actual use by the charity itself. The majority of charities sell donated vehicles at auctions and use the proceeds to fund their programs.

Prior to donating a car, you should decide which charity you choose to donate to and make certain they are listed as a qualified charity with the Internal Revenue Service (IRS). Some charities use a car donation service, and others handle vehicle donations themselves. Check with the charity you choose to determine who to contact about donating a car.

As a tax deduction, donating a car can get complicated if you do not understand the tax laws. You can only claim a vehicle donation tax deduction if you itemize deductions when filing. Taxpayers who do not itemize do not qualify for vehicle donation tax deductions. If you itemize your tax deductions and are considering donating a car to charity, you should determine the fair market value of your vehicle.

The tax deduction for donating a car is not to exceed 500 US dollars (USD) unless very specific criteria are met. If you are donating a car worth more than 500 USD but less than 5,000 USD, you can deduct only the amount which the charity receives at the sale of the vehicle. In other words, if you are donating a car with a fair market value of 2,800 USD and the receiving charity sells it at auction for 1,800 USD, then you can take a vehicle donation tax deduction of only 1,800 USD. However, if the charity you donate to uses the vehicle for its own purposes, such as deliveries, pickups, or other purposes that further their cause, you can deduct the full fair market value. Specific information is required to accompany your tax forms when deducting a vehicle donation, so be sure to obtain the information necessary to your situation from the charity at the time you donate.

Though donating a car may seem difficult, it is actually quite simple. The charity or donation service should be adept at answering your questions and make it easy to complete the process. They will even arrange for pickup through a towing company in your area.

In most cases, people donate vehicles to avoid the hassles of trying to sell or trade an old car or truck. If your vehicle is not running, you aren’t likely to get any value from selling or trading it, but many charities accept such vehicles, and you can take the tax deduction. Donating a car is fairly simple, a worthwhile cause, and may benefit you more on your tax return than selling or junking it. For specific information regarding tax laws, you can obtain a guide from the IRS online.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
By anon148366 — On Feb 01, 2011

Michaelr: You would donate your car because you get almost the same amount but the money goes to a charity and helps people. You don't have to bother with selling it and instead of just paying the money to taxes, it actually goes somewhere and does good things.

But if the hassle and $200 bucks is worth it to you, don't think about the greater good.

By michaelr — On Oct 21, 2010

I was wondering if I donate my car worth $2800 and the receiving charity sells it at auction for $1800, then I would benefit a tax deduction of $1800. But if I put my $2800 car for sale at $2400 and sell it for $2000, then I would pay $1800 for taxes and still have a $200 profit. My question was: why would i use car donation and not just sell my car?

By haverford — On Dec 21, 2007

I've had my car for a long time and have no idea where the title is. Will anyone take it without my title? Any way of getting more than a $500 tax write off without having someone sell it?

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