Donating an old vehicle is a win-win situation. On the one hand, you’re helping a charitable organization do meaningful work; on the other, you can write off the donated car as a tax deduction.
Just how much can that deduction be, though? The following section provides an easy to understand guide:
If a Car is Valued at $500
If your car has a fair market value price of at least $500 but sells at lower that amount, you can claim the full $500 deduction just the same. Consider this a pat on the back for doing a good deed. This “sub-$500” rule applies to all succeeding scenarios described below.
If a Car is Valued at $501 – $5000
Let’s say your car is valued at $5000 but it was sold at just $4000. In this scenario, the amount you can deduct equals the actual sale price, which is $4000.
If a Car is Valued at $5001 or More
When a car’s fair market price exceeds $5000, you must engage with an IRS-qualified and -compliant appraiser to certify its value. Likewise, the total deduction you can claim is limited to the vehicle’s actual selling price at auction.