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Donating a Car to Charity

May 06, 2014

If you donate your car to charity, you may claim a taxdeduction for the donation if you itemize yourdeductions on your federal income tax return. To getstarted, you'll need to pick a qualified charitableorganization, determine the fair market value (FMV)of your car, and obtain the necessary documentationfor your donation.

Pick a qualified charityYour donation won't be tax deductible unless youmake it to a qualified organization. Generally, themost common types of qualified organizations areSection 501(c)(3) organizations such as charitable,educational, or religious organizations. To determineif an organization is qualified, you can check InternalRevenue Service (IRS) Publication 78, CumulativeList of Organizations. This publication is available onthe IRS website, www.irs.gov.

You can also call the IRS Customer Account Servicesdivision for Tax Exempt and Government Entitiestoll-free at (877) 829-5500 to find out if anorganization is qualified.

Determine your car's fair marketvalueWhen you donate your car to charity, you must firstdetermine its fair market value. The FMV representsthe maximum deduction you may take on your federalincome tax return.

Certain commercial firms and trade organizationspublish monthly or seasonal guides for differentregions of the country that contain dealer sale pricesor average dealer prices for recent model cars. Whilethese prices are not "official" and the publications arenot considered appraisals of any specific donatedproperty, they do provide clues for making anappraisal and suggest relative prices for comparisonwith current sales and offerings in your area.

However, FMV may be affected if your car has enginetrouble, body damage, high mileage, or excessivewear. For the FMV of your car to be considered the

same as the price listed for a private party sale insuch a guide, that price must be for a car that is thesame make, model, and year as yours, and that issold in the same area, in the same condition, and withthe same or similar options, accessories, andwarranties as your car.

In certain circumstances, if the tax deduction youclaim for your car is greater than $5,000, you mayneed a written appraisal of the car's FMV from aqualified appraiser. The appraisal must be made nomore than 60 days before you donate the car.

Obtain the necessary documentationFor deductions of less than $250, you'll need a receipt(a letter from the organization will suffice) that showsthe name of the organization to which you made thedonation, the date and location of your contribution,and a reasonably detailed description of the car.You'll also need a record of the FMV of the car (andhow you determined it) at the time of the contribution.

If you claim a deduction of $250 or more, you'll needa contemporaneous written acknowledgment of yourdonation. In addition to information about theorganization, the date and location of yourcontribution, and a description of the car, thisacknowledgement must include one of the following:

1. A statement that no goods or services wereprovided by the charity in return for thecontribution, if that was the case

2. A description and good-faith estimate of the valueof any goods and services that the charity providedin return for the contribution, or

3. A statement that goods or services that the charityprovided in return for the contribution consistedentirely of intangible religious benefits, if that wasthe case

Worth noting:

Because churches,synagogues, temples, andmosques are treated asexempt organizationswithout filing an applicationfor exemption underInternal Revenue CodeSection 501(3)(c), they arenot listed in Publication 78.

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Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2014

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for anyindividual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performancereferenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The tax information provided is not intended to be a substitute for specific individualized tax planning advice. We suggest that you consult with aqualified tax advisor.

Securities offered through LPL Financial, Member FINRA/SIPC

If you claim a deduction of more than $500, thecharity must use IRS Form 1098-C as theacknowledgement. This form will indicate that thecharity either:

1. Sold the car in an arm's-length transaction to anunrelated party (the date of the sale and the sale'sgross proceeds will be listed)

2. Will make a significant intervening use of ormaterial improvement to the car before transferringit, or

3. Will give the car, or sell it for a price well below itsFMV, to a needy individual in furtherance of itscharitable purpose

If the charity elects either of the last two options listedabove, it must send you Form 1098-C within 30 daysof your donation; otherwise, you must be sent Form1098-C within 30 days of the sale of your car. Youmust attach a copy to your return.

Claim the deductionIf the charity sells your car and you claim a deductionof more than $500, you can deduct the lesser of (1)the gross proceeds of the sale (as indicated on Form1098-C), or (2) the car's FMV on the date of yourcontribution. However, if the charity doesn't sell thecar, but instead elects to (1) make a significantintervening use of it or materially improve it prior to itstransfer, or (2) give away the car or sell it at a pricewell below its FMV to a needy individual infurtherance of its charitable purpose, you cangenerally deduct the car's FMV at the time of yourcontribution. In this instance, Form 1098-C shouldindicate which of the two exceptions applies.

You can take a deduction only for the year in whichyou transfer the car to the charity, even if the charitydoesn't sell the car until a later year. However, youcan't take a deduction of more than $500 until you'vereceived Form 1098-C to attach to your return. Thus,if you receive Form 1098-C after you file your returnfor the year of the donation, you may then file anamended return for that year, claim the deduction onthe amended return, and attach Form 1098-C to theamended return.

For deductions of greater than $500 but not morethan $5,000, you must also complete Section A ofForm 8283, Noncash Charitable Deductions, andattach it to your tax return.

If your deduction is for an amount greater than$5,000, you must complete Section B of Form 8283,have it signed by an authorized official of the charity,and attach it to your return. In this instance, if yourdeduction is not limited to the gross proceeds of thesale of your car (i.e., one of the two allowableexceptions noted above applies), the appraiser mustalso complete and sign Section B of Form 8283, andyou must also attach the appraisal to your return.

If the charity sells your donated car for $500 or less,you can deduct the lesser of $500 or the FMV of yourcar on the date of your contribution. However, if oneof the exceptions noted above applies, you maygenerally deduct the FMV of your car.

Tax Filing Requirements - Amount ofDeduction$500 or less Over $500 but

not over $5,000Over $5,000

• Form 1040• Schedule A

• Form 1040• Schedule A• Copy of Form

1098-C• Form 8283,

Section A

• Form 1040• Schedule A• Copy of Form

1098-C• Form 8283,

Section B

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