tax write off for donated car. how does this work?

Question

if somebody donates a vehicle to me, how can they get a tax break for this? who determins how much?

i have a program that is going to be set up as a non-profit buisness working with cars and teens. will this make a diffrence?

Answer 1

If the vehicle donated to a 501c3 tax exempt organization, the donor can take a tax deduction (assuming they itemize) of the retail value of the vehicle, up to $500.

If the charity sells the vehicle for more than $500 you can take the actual amount that they received as your deduction!

If the charity keeps the car to use to further their mission, you can take the full market value of the vehicle (the $500 limit does not apply)

Examples:

1) You donate an old car. The charity sells it at auction for less that $500. You can take the actual fair market value, up to $500 as a deduction.

2) You donate a fairly nice vehicle. The charity sells the vehicle for $1500 and notifies you of the sale. You can take a $1500 deduction on your taxes (book value does not matter)

3) You donate a vehicle, and the charity keeps it to use themselves (such as a church keeping the car for the pastor to drive). You can take fair market value (book value) as your deduction.

The charity has to be an IRS 501c3 organization for there to be any tax deduction!

Answer 2

You might consider to pay the tax deduction that the donator would receive if using a registered charity. This way you and the donator should be happy!

Tarsha
It's Official: Sharing Makes Us Happier!

Answer 3

Unless you are a charity registered with the IRS they will get no tax break.
This tax rebate is for charitable donations to an approved organization like the Salvation Army.
The amount is usually determined by the fair market value of the vehicle.