Tax Help - Donations of Vehicles

If a taxpayer donates a car to a qualified organization, the deduction is limited to the gross proceeds from its sale by the organization.

This rule applies if the claimed value of the donated vehicle is more than $500. However, if the organization makes significant intervening use of or materially improves the car, the taxpayer may be able to deduct its fair market value.

In addition, the taxpayer may be able to deduct the car’s fair market value if the organization will give the car, or sell it for a price well below fair market value, to a needy individual to further the organization’s charitable purpose.

The organization must send the done Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes within 30 days of the sale of the vehicle, boat, or airplane, and the taxpayer must attach Form 1098-C to his or her tax return.