Tax Deduction at a Glance
IF YOUR CAR SELLS FOR MORE THAN $500:
The IRS allows you to claim a tax deduction of the amount the car sold for. Your tax-deductible receipt will be for the car's full sale price.
IF YOUR CAR SELLS FOR LESS THAN $500:
You can claim the fair market value of the car,
up to $500. According to the IRS, it is up to you
to determine the fair market value of your car.
How do tax deductions for car donations work?
You can receive a tax deduction by following these four simple steps.
Step 1: Donate to a registered nonprofit.
The most important consideration when choosing a charity is determining its "exempt"
status. To be eligible for a tax deduction, the car must be donated to a tax-exempt nonprofit
organization, most commonly known as a 501(c)(3) organization.
To verify if an organization is tax-exempt, use the IRS search tool, or ask to see the organization’s IRS letter recognizing it as tax-exempt.
Kars4Kids is a nationally recognized 501(c)(3) organization. Our Tax ID number is 22-3746050.
Step 2: Determine the deduction amount.
According to the IRS -
- If the charity sells your car for more than $500:
- You can claim the full sale price for your tax deduction.
- If the charity sells your car for less than $500:
- You can claim the fair market value up to a maximum of $500.
- Sometimes a charity may use the vehicle for its own use. In such a case, you can
claim the fair market value for the car.
Kars4Kids does not retain possession of its cars and will always work to receive the highest possible sale price.
Step 3: File taxes and claim deductions.
- If your car is sold for less than $500:
- All that is needed is to write the deduction amount on your IRS 1040 Form.
- If your car sold for more than $500:
- 1. IRS Form 1098-c. Many charities, like Kars4Kids, provide a receipt that can be used
in place of the 1098.
- 2. IRS Form 8283 Section A
- 3. For e-filing - Form 8453
- If your car is sold for more than $5,000:
- 1. IRS Form 8283
- 2. IRS Form 1098-c or legal receipt from charity
- 3. A written appraisal of the vehicle’s value.
Step 4: Keep records.
- The IRS requires you to retain the following information for your records:
- 1. Name and address of charity
- 2. Date of donation
- 3. Place where you donated your vehicle
- 4. Description of vehicle (year, make, and model)
- 5. Written acknowledgment or legal receipt from charity (when sold for more than $500)
The receipt you’ll receive from Kars4Kids contains all the above information and is all the documentation you’ll need.
Kars4kids is a classified 501(c)(3) charity organization. You can check with your tax advisor or accountant to determine the amount of your benefit.The deduction is of value only if the donor itemizes his or her deductions. For a more detailed overview the IRS publishes a Donors Guide to Car Donation.