Tax Advantage of Donating Your Vehicle
Not only does donating your car, truck, boat, or motorcycle to Goodwill of Greater Washington help community members with disabilities receive job training and find employment, your donation is also tax deductable! Goodwill Industries is an IRS-Approved 501(c)(3), which means that donations made to Goodwill are 100% tax deductable.
If you have questions regarding vehicle donation tax deductions, it is always best to consult with your tax professional. However, below you will find some of the most relevant information regarding your tax deduction.
The IRS has specific regulations for vehicle donations, outlined in IRS Publication 561. This publication stipulates that charities are prohibited from assigning a value to material (non-monetary) donations. In the case of vehicle donations, the donor is eligible to deduct the fair market value of the vehicle up to $500 or the amount the vehicle sells for at auction, whichever is greater.
IRS Publication 561 states:
“If the claimed value of the donated motor vehicle, boat or plane exceeds $500 and the item is sold by the charitable organization, the taxpayer is limited to the gross proceeds from the sale.”
The Goodwill car donation program provides donors with all the proper documentation for their tax deduction. At the time of pickup, Goodwill of Greater Washington will give you a donation receipt which will serve as proof that your vehicle was donated on that date as well as allow you to take a tax deduction of the fair market value of your vehicle up to $500 without further documentation.
After the donated cars are picked up, Goodwill takes them to a public auto auction to be sold. The process of picking up and selling the vehicle is usually completed within 2-4 weeks of the date you donated your vehicle. After your donated car has been sold, Goodwill of Greater Washington will mail you a letter to notify you that the care has been sold. You should receive this letter within 2 weeks of the sale of your vehicle. If your vehicle was sold for more than $500, this letter will notify you of the final selling price. If your vehicle sells for less than $500, this letter will notify you that you are eligible to take a deduction of the fair market value of the vehicle up to $500 without further documentation.
Car donations to Goodwill Industries are tax deductible according to the regulations set by the IRS. However, it is also important for donors to note that federal tax law also stipulates certain eligibility requirements for tax deductions. For information about your eligibility to take a deduction for your vehicle donation, please consult with your tax preparer or the IRS. You can contact the IRS toll free at 1-800-829-1040 or visit their website at http://www.irs.gov/.