How to Donate a Car to Charity and Get a Tax Deduction

Do some good, save on income tax, get more garage space

Flatbed tow truck unloading a car to an auto garage shop

E+ / Getty Images

John Waggoner,

AARP

En español

Published November 23, 2022

Giving Tuesday, the first Tuesday after Thanksgiving, was created in 2012 to encourage people to do some good by, say, volunteering or giving to charity. If you own a car that you don’t need and you have a tax bill you’d like to reduce, consider doing good by donating your car to charity. You’ll get extra space in your garage and a tax deduction, too.

As with all things taxable, charitable auto donations are somewhat complicated. You’ll need to be sure that you can, in fact, deduct your donation from your income at tax time. You’ll also have to figure out the value of the car and, in some cases, provide an appraisal.

The standard deduction

Tax law has nothing against donating cars, boats or even dump trucks to charity, and many charitable causes will accept cars and other motor vehicles as a donation. Some will even tow them away for you.

The main problem with claiming a deduction for a donated car is overcoming the standard deduction. Everyone gets a standard deduction, and it’s a whopper: $25,900 for joint filers, $19,400 for heads of household and $12,950 for single filers and those married filing separately for the 2022 tax year. Taxpayers who are 65 or older or blind can add on another $1,400 ($1,750 if filing as single or head of household).

The standard deduction will be even bigger in 2023, because it’s adjusted for inflation. The standard deduction for married couples filing jointly for tax year 2023 rises to $27,700; for single taxpayers and married taxpayers filing separately, it will be $13,850.

A big standard deduction is a good thing because it reduces your taxable income, which trims your tax bill. But 90 percent of taxpayers don’t have enough deductions to get more than the standard deduction.

Consider a married couple in 2022 who have $6,000 in other deductions. If they donate a car worth $4,000, they will have $10,000 of deductions, which is great, but far less than the standard deduction for joint filers. They would be better off taking the much larger standard deduction and be content with a little extra garage space.

How much is it worth?

Let’s say, however, that you expect to have enough in medical expenses, state and local taxes, and other charitable donations to make itemizing worthwhile. In this case, you’ll need to put a price tag on the car for tax purposes.

Typically, charities simply sell the car you donated and pocket the proceeds. If that’s the case, then you can only deduct the amount that the charity received for the sale. If you think your car is worth $4,000 and the charity sells it for $2,000, your deduction is $2,000. The charity must send you Form 1098-C, which will tell you how much your car sold for.

If the charity sells the car for $500 or less, you can deduct $500 or your car’s fair value, whichever is lower. If your car is valued at $600 and the charity sells it for $400, you can deduct $500.

Sometimes charities use donated cars as part of their business or fix them up to give to the needy. In that case, you can use a recognized used car price guide, such as the Kelley Blue Book or Edmunds.com, to determine the fair market value of your car.

You’ll need to report your deduction on Schedule A of your federal income tax return. If your car donation is more than $500, you must also fill out IRS Form 8283. If your deduction for the car is between $501 and $5,000, fill out Part A of the form. If your deduction for the car is worth more than $5,000, you’ll need to fill out part B of the form — and include an appraisal from a qualified appraiser.

Making the donation

If you have a charity in mind to receive the car, call and ask if it accepts vehicle donations. If not, there are plenty of charities that do: Habitat for Humanity, Ronald McDonald House Charities, the Salvation Army and many others will take donated cars.

You can’t just park the car in front of the charity and toss someone the keys. You’ll need documentation from the charity containing your name, the vehicle identification number and the date of your donation. If you receive anything of value from the charity for the donation, you’ll have to include that as well.

And don’t make giving the car any harder than it has to be. Choose a charity that offers free towing.

%{postComment}%

Benefits Recommended For You

See All