Car Donations and the New Tax Law
The 2018 tax law has made changes to the standard deduction which effectively raises the threshold for itemizing. Car and other charitable donations treatment have not been changed in what is allowed, however to actually receive a financial benefit on your taxes after itemizing you will need to have more deductions now that the standard deduction has been increased
You can only deduct a vehicle's fair market value on your tax return by following specific rules.
1
First you Must Itemize Your Return- Given the higher thresholds from the new tax law you may find it harder to have enough deductions when itemizing to gain an advantage over the standard deduction.
2
The Charity Must Qualify- For the donation to qualify as a tax deduction it needs to be made to a qualified charity, namely a 501(c)(3) organization as recognized by the IRS. Religious organizations are a special case. They do count as qualified organizations, but they aren't required to file for 501(c)(3) status.
3
Remember: Fair Market Value- Currently the IRS rules state you can only deduct a vehicle's fair market value under four specific conditions. The first is when a charity auctions the vehicle for $500 or less, you can claim the lower amount of either the fair market value or $500. The second is when the charity intends to use of the vehicle in its operations. The third is when the charity intends to make a material improvement to the vehicle, not just routine maintenance. And lastly, the charity gives or sells the vehicle to a needy individual at a price significantly below fair market value.
IRS Donor's Guide
calculatorThis is what the IRS says is Fair Market value.
Generally, fair market value is the price a willing buyer would pay and a willing seller would accept for the vehicle, when neither party is compelled to buy or sell, and both parties have reasonable knowledge of the relevant facts.
If you use a vehicle pricing guide to determine fair market value, be sure that the sales price listed is for a vehicle that is the same make, model, and year, sold in the same condition, and with the same or substantially similar options. IRS Publication 4303
Car Value
To come up with a fair market value on a vehicle there are several online resources that can be used. One such tool is Edmunds Online Car Appraisal Tool.
For special situations, like a car that has significant damage or engine problems. you should talk with a professional. We do not value cars other than offer online information or tools, such as the one above.