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

The tax law did change. You may have heard that tax deductions for cars donated to charities are no longer allowed. 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 an Opportunity Cars Program and they are able to use it in their program for a low income family, you can still deduct the fair market value.

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.

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 money put back invested back into supporting the programs. 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).

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