What are the tax benefits of donating my car to a car ownership program?
I thought the tax law changed -- can I still get a deduction for a car donation?
Do I have any liability for my car after it's donated?
Do car ownership programs use all the donated cars for low income families?
DIsclaimer

What are the tax benefits of donating my car to a car ownership program?
If your car can be repaired and provided to a family, you can deduct the fair market value as a charitable contribution provided you file an itemized federal income tax return (refer to IRS Bulletin 2005-25).  In some states, other tax benefits may be available. If you have specific questions about how a car donation will affect your tax liability, you should consult an accountant or other tax professional.  To determine your vehicle’s fair market you may want to consult Kelly Blue Book or NADA Guides.  Additional tax information is also available at www.irs.gov

I thought the tax law changed -- can I still get a deduction for a car donation?
The tax law did change.  You may have heard that tax deductions for cars donated to charities are no longer allowed.  This is not true.  The deduction will continue. However the method of calculating the deduction has changed. Effective January 1, 2005, the IRS issued new rules regarding tax deductions for vehicles donated to charities. Those rules limited the amount taxpayers can deduct to the actual sale price of the vehicles.

The IRS made an exception for charities that use the vehicles rather than sell them and specifically exempted low-income car ownership programs (see IRS Bulletin 2005-25). If you donate your vehicle to a car ownership program and they are able to use it in their program for a low income family, you can still deduct the fair market value.

Do I have any liability for my car after it's donated?
NO. You will sign the title over to the program that is receiving the donated car. If you have specific questions about how your title will be handled, be sure to ask the program contact person at the time you discuss the arrangements for the donation.

Do car ownership programs use all the donated cars for low income families?
Not all cars can be used in the programs for low income families. Luxury cars or sports cars may be too expensive to maintain and operate for a family, and it is not always practical to repair a car due to its age and condition. These types of donated cars may be sold and the proceeds used to support the program. In these cases, the donor may deduct what the car sells for. If greater than $500, programs are required to provide Form 1098-C which the donor must attach to their tax return. The IRS requires the donor's social security number to process this form. If the car is worth more than $5000, you will need to get an independent appraisal (refer to IRS Publication 561 - Determining the Value of Donated Property).

Disclaimer
: The information contained in this site is not intended as advice on any income tax liabilities or issues. Use of any information from this site is for general information only. You are encouraged to seek professional tax assistance for any questions.

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