Car Donation Tax Breaks

Written by Rylee Newton
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Donating a car to charity is not only a rewarding experience, but it is also a great opportunity to get a break on your taxes. As of 2005, when you donate a car to charity, you can only claim a tax deduction in the amount the charity sells your car for. If you want to write off the fair market value for the car, there are a few ways to get around the new laws.

If your car sells for less than $500, you can write off the fair market value instead of the sale price. The federal government allows you to write off a maximum fair market value of $500 for a car donated to charity. The federal government also allows you to write off the fair market value for your car if you donate it to one of several different approved charities. These charities generally sponsor programs for people with special needs.

Determining Fair Market Value

One of the best ways to determine the fair market value of your car is to check out a publication called the Kelley Blue Book. This publication provides information for a variety of different makes and models, and is considered the industry standard when it comes to determining fair market value.

If you find a charity that allows you to write off the fair market value, you can often write off more for your tax-deductible donation than if you wrote of the sale price. However, you must make sure that the charity you donate to is approved by the IRS. If you can determine this, then you have found a great way to help out that offers a nice personal benefit.

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