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If a tax deduction is an
important consideration
for you when donating a car
to a charity, you should check out the
charity; check the value of your car; and
see what your responsibilities are as a donor.
Selecting a Charity
If you are eligible to deduct charitable contributions for federal income tax purposes (see Qualifying for a Tax Deduction later) and you want to claim a deduction for donating your car to charity, then you should make certain that the charity is a qualified organization. Otherwise, your donation will not be tax deductible. The most common types of qualified organizations are section 501(c)(3) organizations, such as charitable, educational, or religious organizations. This publication refers to section 501(c)(3) organizations generally as “charities.” To verify that an organization is a charity qualified to receive tax-deductible contributions, see IRS Publication 78, Cumulative List of Organizations, an annual list of most charities. Publication 78 is available online at www.irs.gov/eo (under the Search for Charities 2 3 topic) and at many public libraries. You may also verify an organization’s status by calling the IRS Customer Account Services division for Tax Exempt and Government Entities at (877) 829-5500 (toll-free). Be sure to have the charity’s correct name. It is also helpful to know the charity’s address. Not all qualified organizations are listed in Publication 78. For example, churches, synagogues, temples, and mosques are not required to apply to the IRS for recognition of exemption in order to be qualified organizations and are frequently not listed. If you have questions, call Customer Account Services at the above number. If you want to learn more about a charity before donating your car, use the resources listed under Assistance Through the Charity, Through State Officials, and Through the IRS at the end of this publication.
Determining the Value of Your Car
The maximum amount you can deduct on your income tax return is the fair market value of your car. Fair market value is the price a willing buyer would pay and a willing seller would accept for the car, when neither party is compelled to buy or sell, and both parties have reasonable knowledge of the relevant facts. Some fundraisers have mistakenly claimed that donors can, in all cases, deduct the full value of their cars as found in a used car guide (such as “blue book” value). A used car guide may be a good starting point to value your car, but you should exercise caution. The IRS will only allow a deduction for the fair market value of the car, which may be substantially less than the “blue book” value. Example: You donate your car to the local high school for use by students studying car repair. Your credit union representative told you that the “blue book” value of the car is $1,600. However, your car needs extensive repairs, and after some checking, you find that you could only sell your car for $750. Your charitable contribution deduction may not exceed $750, the fair market value of the car.
Qualifying for a Tax Deduction
You can deduct contributions to charity only if you
itemize deductions on your Schedule A of Form 1040.
You must take into account certain limitations on charitable
contribution deductions. For example, your deduction
cannot exceed 50% of your adjusted gross income.
Other limitations may apply. Publication 526, Charitable
Contributions, provides detailed information on claiming
deductions and the deduction limits. It also describes the
types of organizations that are qualified to receive taxdeductible
contributions. Publication 526 is available
online at www.irs.gov or by calling (800) 829-3676 (toll-free).
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