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Donate A Car

Written by Kris | Published: July 26, 2006

You might be asking, “why would I want to donate a car to a charity?” There are several reasons:

  1. You can receive a tax credit for your donation.
    The Well Ministries is a 501(c)(3) organization making all donation tax deductible. But you can only receive the tax deduction if you itemize on your 1040 tax return.
  2. You will receive the maximum donation allowed by law.
    There are many online resources for determining the fair market value of your car donation. Checking the “blue book value” will give you guidance on the general value of your donated vehicle, but you should also take into account the overall condition of your car donation when donating to charity. Your car donation is tax deductible and will fall into one of these categories:
    • For low value vehicle donations you can claim the fair market value up to $500.00 without any additional paperwork besides the receipt we will provide at the time of the pickup.
    • If you donate a car that is worth more then $500.00, your deduction will be limited to the actual sale price of your car donation. If your vehicle is sold, all proceeds will benefit The Well Ministries, a 501(c)(3) non-profit organization. We will provide you with a receipt stating the final sales price of your vehicle within 30 days of the sale of your donated car. We will work to get top dollar for your car donation, however some vehicles are sold “wholesale” at auctions, dealerships etc. and are frequently sold for less then the Kelly Blue Book value.
    • For cars that are in safe and good running order that we can specifically use for our charitable projects, if we can donate it to a needy famly, or if we can significantly improve your vehicle before it is sold then you can generally claim your car’s fair market value. If your donated vehicle is used by The Well Ministries for our charitable purposes or if it is improved before the sale, we will provide you with a receipt specifying this exception so that you can claim the fair market value of your car donation.
  3. You are helping a good charity with a financial contribution.
    You can read more about our mission from our website.
  4. You don’t have to be burdened with trying to sell the car.
    Most of the time we can pick up your car and take care of all of the paperwork required to transfer the title. Usually you will need to provide a title for your vehicle if you wish to donate your car to charity. If you have lost your title, you should contact the Motor Vehicle Department in your State to obtain a duplicate title.

You can get more information on donating your car from the IRS with Publication 4303

If your combined charitable donations of non-cash items are valued at more than $500 during the tax period then you will need to fill out IRS form 8283.

IRS guidelines for car donations

From the IRS website:

“Donors should understand the way that the American Jobs Creation Act of 2004 will alter the rules for the contribution of used motor vehicles, boats and planes after Dec. 31, 2004.

Next year, if the claimed value of the donated motor vehicle, boat or plane exceeds $500 and the item is sold by the charitable organization, the taxpayer is limited to the gross proceeds from the sale.

Under the new rules, the charitable organization must provide an acknowledgement to the donor within 30 days of the sale stating the amount of gross proceeds. Alternatively, if the charity significantly uses or materially improves the vehicles, the charity must certify this intended use and duration and provide an acknowledgement to the donor within 30 days of the contribution. If the charity significantly uses or materially improves the vehicle, generally, the donor may deduct the vehicle’s market value.”

Summary of car donation tax legislation

  • The charity that you donate your car to should provide a receipt for your car donation proving that your vehicle was donated to an IRS registered charity.
  • When you donate a car to charity and your vehicle is sold by the charity you can claim a tax deduction for the sale value of your donated vehicle. For vehicles that sell for $500 or less the charity will simply provide the original pickup receipt and you can claim up to $500 for your car donation according to the actual value of the donated vehicle.
  • If the sale price of your vehicle donation is more than $500, then you will receive a second receipt from the car donation charity with the actual sale amount — and you can claim the full amount of the vehicle sale as a deduction.
  • However you are permitted to claim the full Fair Market Value of your car donation if the vehicle falls into one of these categories:
    1. Significant repairs are made to the vehicle before the car donation charity sells the vehicle.
    2. The charity uses the vehicle donation for its nonprofit purpose.
    3. The vehicle is sold at a reduced price by the charity to low income families as part of their charitable purpose.
Other helpful IRS Publications and Forms

IRS Publication 561: Determining the Value of Donated Property: This publication is designed to help donors and appraisers determine the value of property (other than cash) that is given to qualified organizations. It also explains what kind of information you must have to support the charitable contribution deduction you claim on your return.

IRS Publication 561: Appraisals: Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5,000, other than money and publicly traded securities, you must get a qualified appraisal made by a qualified appraiser, and you must attach an appraisal summary (Section B of Form 8283) to your tax return.

IRS Form 8283: IRS form for non-cash charitable contributions.

IRS Publication 1771 – Charitable Contributions – Substantiation and Disclosure: This publication explains the federal law for organizations (such as charities and churches) who receive tax-deductible contributions and for taxpayers who made contributions.

IRS Charity Search: To verify that we are officially registered as a non-profit charity

Car Donation articles
  • From the Better Business Bureau: Tips on contributing used cars to charity: “The solicitation of used vehicles has become an increasingly popular means of raising funds, especially for local or regional organizations. On the surface, it seems like a win-win situation for the donor and the charity: a convenient and easy way of disposing of an unwanted car while helping a cause. Before handing over those keys, however, there are some things that you should know.”
  • From the American Institute of Philantropy: Tips for Donating a Car to Charity “A charity that uses a donated vehicle for transportation or hauling goods obviously benefits directly from such a donation. However, in many cases the cars will be sold en masse, either by the charity itself or by a dealer to raise funds for the charity. In the case of a dealer, the charity generally receives a flat fee per car, sometimes as little as $100 per car.”
  • Don’t Dump that Old Car, Donate It: By Kay Bale, Bankrate.com: “When your old jalopy is down to its last sputter, don’t automatically trade it in. That beater may be worth more to you as a tax deduction. To write off your auto gift, you must itemize. So if your old car is the only deduction you can claim on Schedule A, giving it to a charity may not be worth it from a tax standpoint. But if your tax-deductible expenses are close to the standard deduction amount allowed for your filing status, counting the value of a donated car could be just what you need to make itemizing the right tax choice this year.”
  • Charity Begins in the Driveway: By the Car Connection: “If you’re still working on taxes, you’re probably looking for a way to increase your deductions. Look no further than your driveway the IRS allows you to deduct the fair market value of that unused vehicle you’ve been thinking of unloading.