Vehicle Donation Myths and Facts

Donating your vehicle to charity may be for you a very smart solution for disposing of your used vehicle.

We wish to assist you in better understanding the donation process.

Each of the following FAQs are answered in detail below...

1. What constitutes a legitimate vehicle tax receipt?

2. Will you give me the highest possible value for my donated vehicle on my tax receipt?

3. Does the fair market value of donated vehicles get deducted from the taxes owed at the end of the year?

4. If the fair market value of my donated vehicle is $3,000.00, how much of that figure is deducted from the income taxes that I owe?

5. My old Honda Accord has a Kelly Blue Book wholesale value of $2,100.00 and a suggested retail value of $3,950.00, but it needs a new traney. Can I take an average of the two values and deduct the cost of a new transmission to determine the Honda's fair market value?

6. I do not itemize on my tax returns. Can I still benefit from a vehicle donation?

7. I have not itemized in the past but if I donate my car, I might itemize. Would it be worth it for me to itemize?

8. My used car might be old but it's worth money and I don't want to go to all the trouble of selling it or get cheated with a trade-in. I don't itemize, what can I do?

Tax Deduction FAQs

1. What constitutes a legitimate tax receipt?

The vehicle tax receipt you will receive will be legitimate, and will contain all of a vehicle tax receipt's necessary elements.

The elements of a legitimate vehicle tax receipt are: the charity's name; its Federal Tax ID number; the donor's name; date of donation; and, the year, make and model of the donated vehicle.

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2. Will you give me the highest possible value for my donated vehicle on my tax receipt?

The responsibility for determining the fair market value of your vehicle rests with you, the owner. However, it is usually very simple to find out the fair market value.

The fair market value is rather easy to determine. When you send in your donation form we send you simple instructions that will assist you to determine its fair market value.

If you are placing a fair market value of $5,000.00 or more on your vehicle, please mention that when you send in your donation form so we can arrange for the IRS required appraisal from a certified professional vehicle appraiser. If we feel that your vehicle is more valuable than $5,000.00 then we will arrange and pay for the appraisal.

For more information about determining the "fair market value" of a vehicle visit the IRS page: http://www.irs.ustreas.gov/prod/forms_pubs/pubs/p526toc.htm and then click on the section called "Contribution of Property." The page that it takes you to has a section called "Determining Fair Market Value" and in that section is a sub-section called "Cars, boats, and aircraft."

No reputable charity will place any value, whatsoever, on your vehicle.

There is a term in law entitled conflict of interest, wherein a "clash" occurs between the public's interest and the pecuniary (financial or monetary) interests of an individual, or group.

For instance: if you find a charity (or a for-profit entrepreneur operating under the guise of the charity's name) claiming to give you the highest possible value for your vehicle, or any value at all that is what the IRS has determined to be a conflict of interest; and that is illegal.

This illegality is easy to see. The actual fair market value of your vehicle is what the IRS sees as in the public's interest. An inflated fair market value is what the IRS sees as being opposed to the public's interest. To avoid a conflict of interest the IRS has denied charities the right to place a value on donated vehicles or on any other donated property.

Legal tax receipts from 501(c)(3) charities may only provide proof of your vehicle donation and specify its nature. Legal tax receipts for vehicles typically only state the donor's name, the date of the donation, and the year, make and model of the donated vehicle.

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3. Does the fair market value of donated vehicles get deducted from the taxes owed at the end of the year?

No. What you are referring to is a tax credit. Tax credits have not existed since the Kennedy administration and were Investment Tax Credits. Such credits were designed to stimulate investments by business in capital goods and equipment by allowing a percentage of the purchase price as a credit against taxes due and not merely as a deduction from taxable income.

However, the fair market value does reduce your total tax liability (the amount you owe) assuming you are in a position where you can claim a tax deduction for a charitable contribution.

Not everyone can do this. You have to "itemize" deductions. If you file a 1040 Short Form you are not itemizing deductions. If you are in question as to whether or not you itemize deductions please ask the person that does your tax return each year. He/she will know.

If you do not itemize you can still get free pickup and valuable benefits using the recycling program. Click here for information about valuable benefits you can receive using the recycling program.

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4. If the fair market value of my donated vehicle is $3,000.00, how much of that figure is deducted from the income taxes that I owe?

This is a tiny bit complicated, so if you do not understand it please ask your tax advisor or tax preparer.

A percentage of your $3,000.00 donation gets deducted from your taxable income.

The actual amount of taxes you save will be determined by your tax bracket. If you are in the 30% tax bracket, for example, then your actual tax benefit would be $900.00 on your $3,000.00 donation. In other words, 30% of $3,000.

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5. My old Honda Accord has a Kelly Blue Book trade-in value of $2,100.00 and a suggested retail value of $3,950.00, but it needs a new traney. Can I take an average of the two values and deduct the cost of a new transmission to determine the Honda's fair market value?

No. The IRS considers a vehicle that doesn't run, or is not mechanically safe, to have a reduced fair market value. When determining the trade-in value at Kelley Blue Book you can get very specific about the condition of your vehicle. You can enter details about every aspect of your vehicle's condition. From that you will get an accurate trade-in value. The fair market value is usually somewhere between the trade-in value and the retail value. With a car that is not running it is very close to the trade-in value or could even be below that.

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6. I do not itemize on my tax returns. Can I still benefit from a vehicle donation?

No. You must itemize your deductions on your tax returns to receive a tax deduction for a vehicle donation.

However you can take advantage of our recycling program. Just fill out the online recycling form. You can still receive free pickup AND you can receive benefits that are in line with the actual fair market value of your vehicle.

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7. I have not itemized in the past but if I donate my car, I might itemize. Would it be worth it for me to itemize?

To itemize, you'll have to file the 1040 Long Form and the process of itemizing is a bit complicated. If you have not itemized before and are now considering it, check with an accountant to determine if it would really pay you to itemize and if you can do so and receive a benefit. The IRS allows a "standard deduction" for individuals and married couples filing singly and jointly. If you itemize your deductions, to get a benefit from a donation, the total allowed itemized deductions have to be greater than the standard deduction you would normally receive.

If you do itemize then simply follow the instructions given at the online recycling form. Fill out the form completely, choose tax receipt, and hit the Submit button at the bottom of the form.

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8. My used car might be old but it's worth money and I don't want to go to all the trouble of selling it or get cheated with a trade-in. I don't itemize, what can I do?

The hassle free and no risk way to recycle your used vehicle is through the recycling program.

Since the recycling service is not a donation program, you will have no tax preparation complications. And you will receive valuable coupons, vacations and/or cruises, often worth more than tax breaks; and you can take your vacation/cruise now or when you choose. See Vacation/Cruises.

Please fill out the Vehicle Recycling Form to get started.

"Service to others", was Allen Price's motto; a briefly stated sentiment, but so appropriate of his character.

In many ways Allen Price embodied all the people you have ever known who have had a positive influence on your life; perhaps he or she was a coach, a teacher, a grand-parent, parent or friend. Do you remember what they said that has stayed with you for a lifetime?

We remember, Uncle Allen, and his, "service to others" is still our motto, and this website does just that.

Read our words carefully and we think you'll agree that we offer a terrific alternative to the hassles, expense and legal entanglements that, too often, come with trade-ins and private sales of used vehicles.