Search the private party prices for your vehicle based on its make, model and overall condition. Consider consulting the Kelley Blue Book My Car's Value online tool, for example. To estimate your car's fair market value to calculate your deduction, the IRS suggests that you use a reputable used-car price guide. Step 2: Determine the car's fair market value For example, if your car is valued at $650 but sells for $350, you can deduct $500.Ĭharities are typically required to report the sales price of your car to you on Form 1098-C. If the charity sells your car sells for $500 or less, you can deduct $500 or your car’s fair market value, whichever is less. However, if the charity sells the car at a significant discount to a needy individual, or keeps the car for its own use, then you can claim a deduction for its fair market value. For example, if the charity sells the car at auction for $3,000, your deduction is limited to $3,000, even if the fair market value is $4,500. Use the price the charity sells your car for as the amount of your deduction. Step 1: Find out how much the charity sold the car for Here are 4 simple steps and tips to help you understand and claim a tax deduction for your donated car on your tax return. In most other cases, you can use the car's fair market value.Deductions for cars the charity sells are limited to the sales price.

The Internal Revenue Service (IRS) requires you to calculate your tax deduction in one of two ways, depending on how the charity uses your donation: Charities are typically required to report the sales price of your car to you on Form 1098-C.ĭonating your car to charity can result in significant tax savings if you include it in your charitable contribution deduction.If the charity sells the car at a significant discount to a needy individual, or keeps the car for its own use, then you can claim a deduction for the car’s fair market value.If the sales price of your donated vehicle is less than $500, you can deduct $500 or your car’s fair market value, whichever is less.The charitable deduction for a car that a charity sells is limited to the sales price, even if the car’s fair market value is higher.

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