The Best Reasons To Donate Your Old Car To Charity

Donating your car to charities was a perfect way to save thousands of dollars in tax refunds until 2004. [1] It didn’t matter how much the car was worth. The American Jobs Growth Act of 2004 did, however, place a $500 cap on deductions on a donated vehicle, plane, cruise, or truck.

Instead of enabling donations to subtract taxes depending on the vehicle’s fair market value [2], you will now only deduct the final selling price as shown by a charity receipt. This resulted in low car rates, making the move controversial.

Should I Donate My Car to Charity?


Some people today ask if giving their car to charity is even worthwhile. Well, Yes and no.  A vehicle that will be used by a charity, on the other hand, can provide you with a substantial tax deduction. [3] Here are six valid causes to donate a running vehicle:

  1. You can donate to a charity that you trust and will count on. This would serve not only you but also an organization that you will fund.
  1. You will donate a completely functional automobile to a charity group. Many critical things may be completed with the aid of a powerful car. United Way, the Salvation Army, and Goodwill are only a couple of the causes that benefit from car contributions. You may still donate your vehicle to a community college or trade school.
  1. You’ll get a sizable tax exemption. Although there are stringent guidelines that make this procedure more complicated, the deduction could be similar to fair market value. You are entitled to a written note specifying the gross proceeds and that the vehicle was “sold in an arm’s length deal between unrelated persons” if a charity purchases a donated car worth more than $500. Charities who choose to use the donated car in their services must then have a formal certification specifying where and how the vehicle will be used. If your car is worth more than $500, you must file IRS Form 8283 for your tax return. For cars costing more than $5,000, you must also receive an independent valuation and apply the charity certification [4].
  1. Not having to sell the car yourself will save you time. This involves advertising an ad, interacting with buyers, showing them the car, and haggling about the price.
  1. Your car will be picked up for free. The majority of organizations that welcome car donations will pick up the cars for free. Towing costs, on the other hand, would be excluded from the value, decreasing the tax-deductible.
  1. Without a clear title, you can still donate the car. Certain charities have no hesitation in accepting a vehicle with no title. Your vehicle, on the other hand, will be exchanged for parts or waste, which will minimize your tax allowance while still cleaning your driveway and preventing any title problems.


Non-cash contributions are often the subject of IRS audits [6], so be detailed with the reporting. You can also read the IRS’s car donation guide. [7] Otherwise, note that giving a car to a charity that can need it or sell it to anyone in need will get you the nearest to the blue book worth of the vehicle. [8]









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