Tax Deduction information for Car Donation

Kars4kids thanks you for your generous car donation. In order to fully benefit from your car donation tax deduction, we have compiled some basic information and commonly asked questions regarding car donation tax deductions.

Kars4kids does not offer any tax advice and all questions should be referred to your tax advisor. You can also visit the IRS website at irs.gov or contact them at 1-800-829 -1040.

Basic information on car donation deduction:

For your car donation, the IRS allows you to claim a tax deduction of:

The value of the car you donated up to $500. It is up to the donor to determine the fair market value of the car donation.
If you received the standard up to $500 receipt for your car donation you do not need to submit a copy of this car donation receipt with your tax return. We do recommend, however, that you save it for your own recordkeeping.

Or

The gross proceeds of the sale if the car you donated sells for more than $500.
If your receipt was for above $500, IRS regulations requires that In order for you to be eligible for a tax deduction, that you submit Form 1098-c or a substitute with your tax return. The tax deductible receipt that you received from Kars4kids, constitutes a substitute 1098-c form. You do not need to fill out a 1098-c form. Simply attach the Kars4kids tax deductible that you received for your car donation to your tax return documents.

E-FILE

Donors who are filing their taxes electronically follow the same guidelines detailed above. After E-FILING you will need to mail out IRS FORM 8453(download here www.irs.gov/pub/irs-pdf/f8453.pdf) along with your tax deductible car donation receipt to the IRS (this is a substitute for the 1098-c). You do not need to mail in a copy of the tax return that was filed electronically.

Using tax preparation software (turbo tax etc..)

Follow instructions for entering charitable donations. Enter the Charity name, Charity address and TAX ID number exactly as stated on the tax deductible receipt. The date of donation and gross proceeds from sale are the date and amount listed on your receipt. YOU DO NOT NEED TO FILL OUT FORM 1098-c. the receipt we provided you is a LEGAL SUBSTITUTE for form 1098-c and should be used whenever prompted for information from form 1098-c.

If prompted for additional information regarding sale of vehicle enter as follows:
  - Donee certifies that vehicle was sold in arm’s length transaction to unrelated party
    - Donee certifies that vehicle will not be transferred for money, other property, or services before completion of material improvements or significant intervening use
  - Donee certifies that vehicle is to be transferred to a needy individual for significantly below fair market value in furtherance of donee’s charitable purpose
- Donee certifies the following detailed description of material improvements or significant intervening use and duration of use
Remember to  only answer yes to the first choice above. Leave all others blank.

Important information:
Kars4kids does not provide any individual tax advice. Above information was taken from IRS guidelines as noted at irs.gov. If you are asked for a form 1098-c by your tax preparer please advise him of the following taken from IRS guidelines:

“Form 1098-C:  You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, or other statement containing the same information as Form 1098-C you received from the organization. The Form 1098- C (or other statement) will show the gross proceeds from the sale of the vehicle.”