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How much can I deduct if I donate my car to charity?

If you donate your car to charity, you can claim an income tax deduction for the donation if you itemize your deductions on your federal income tax return.

The fair market value (FMV) of your car represents the maximum deduction you may take on your federal income tax return. Certain commercial firms and trade organizations publish monthly or seasonal guides for different regions of the country that contain dealer sale prices or average dealer prices for recent-model cars. While these prices are not "official" and the publications are not considered appraisals of any specific donated property, they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. In certain circumstances, if the tax deduction you claim for your car is greater than $5,000, you may need a written appraisal of the car's FMV from a qualified appraiser.

If the charity sells your car and you claim a deduction of more than $500, you can deduct the lesser of (1) the gross proceeds of the sale (as indicated on IRS Form 1098-C) or (2) the car's FMV on the date of your contribution. In the following circumstances, you can generally deduct the car's FMV at the time of your contribution: The charity is going to significantly use your car instead of selling it; the charity is going to fix up the car materially before selling it; or the charity is going to give the car away or sell it (at a price well below its FMV) to a needy individual as part of its charitable mission. In this instance, IRS Form 1098-C should indicate which of the exceptions applies.

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

Charitable contribution deductions are generally limited to 50% of your adjusted gross income (AGI), or 30% or 20% of AGI depending on the type of charity and the property donated. Disallowed amounts can generally be carried over and deducted in the following five years, subject to the percentage limits in those years. Your overall itemized deductions may also be limited based on the amount of your AGI.

IMPORTANT DISCLOSURES Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020.