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I would like to thank you for your assistance and guidance in setting up the KPBS Vehicle Donation Program. As you know, it has succeeded beyond anyone's expectations.

—KPBS, San Diego

Car Donation Tax Deduction

Many in the past have turned a used car donation into a tax shelter. In the year 2000, 733,000 taxpayers got a vehicle donation tax deduction and saved $654 million on their taxes.

Recent laws, however, have changed the rules for deducting a charitable car donation. So can you still use car donation tax rules to your advantage? The experts say you can still deduct a car’s full market value – if you follow the rules.

Because of the recent changes, however, you may find some old information about this subject on the internet. One of the most important things to consider: when you donate a used car (or new car), you’ll want to collect some paperwork.

Let’s say for example, you make a car donation in Los Angeles. But we find a buyer for this donation car in Houston. Once the car is sold and the money is given to your favorite charity, you’ll want to get a receipt for the sale. IRS car donation rules require you to have this receipt to qualify for a deduction.

In fact, 2005 law states you must receive the receipt from the charity within 30 days of making the donation in order to claim a deduction. Charitable Auto Resources is here to help you, where possible. Everyone wins when you get the maximum reduction in tax liabilities that you are entitled to.

When you donate a car, our trained technicians will inspect the car to estimate its sale value. For vehicles valued at over $500, your deduction can be the total amount of whatever the charity sells it for.

There is an exception that can dramatically increase the amount you can write off: how the charity uses the car. If the charity uses the car for a “significant” tax-approved work of charity, as described by the new law, then you can claim the full market value of the car.

For example, lets say you make a bay area car donation, perhaps a kidney foundation car donation or a Goodwill car donation. If your charity is able to use your automobile for a “significant” work of charity approved by this tax law – not only would you be able to deduct whatever the vehicle may have been sold for, you can deduct up to the full amount of value the market value places on this type of auto.

Therefore, whether a California car donation or a Minnesota car donation, when you get your receipt, for tax purposes, you’ll want to be sure to verify how the car was used or whether it was sold.