Key Takeaways
- Only donations to IRS-approved 501(c)(3) nonprofits are tax-deductible.
- You’ll receive IRS Form 1098-C after your vehicle sells (required for your tax return).
- Your deduction is based on the vehicle’s selling price or fair market value.
- Eggleston offers free towing across Hampton Roads communities.
- Donations in Norfolk, Virginia Beach, Chesapeake, and Portsmouth stay local.
Thinking about donating your car, but unsure how it impacts your taxes? You’re not alone. Navigating car donation tax deductions can seem confusing, but understanding the basics can help you maximize your benefits and avoid common pitfalls. In this guide, we’ll answer the most frequently asked questions about car donation tax deductions—covering everything from non-running vehicles to deduction limits—so you can donate with confidence and make the most of your charitable contribution.
What is a Car Donation Tax Deduction?
A tax deduction is an amount you can subtract from your taxable income when you file your annual return.
Giving to charity is one way to get a federal tax deduction, but you’ll have to itemize your deductions instead of taking the standard deduction, an option that’s available to far fewer people than it was before the 2017 Tax Cuts and Jobs Act, which doubled the standard deduction and limited some popular itemized deductions.
You can donate a host of items to qualified charitable, educational, or religious organizations and get a tax deduction, including your vehicle, whether it’s in working condition or not.
The amount you can deduct for a car donation depends on the value of the car and what the charity does with it.
IRS Rules and Regulations
What are the Eligibility Requirements for Car Donation Tax Deductions?
The car you donate must be “manufactured primarily for use on public streets, roads, and highways,” according to the IRS. It doesn’t have to be in working condition, but it does need to have value. And again, you can’t claim the car donation tax deduction unless you itemize.
What Documentation is Required by the IRS
If you’re donating a car to charity to get a tax deduction, you’ll need a detailed receipt from the organization.
The details you need in writing depend on the size of the tax deduction and whether the car was sold by the charity after you donated it. For deductions greater than $500, additional details are required.
In general, the receipt should state:
- Donation Value
- Required IRS Forms
- $500 or less
- No extra forms (keep receipt)
- $501 – $5,000
- IRS Form 1098-C + Schedule A
- Over $5,000
- IRS Form 1098-C + Form 8283 + appraisal
How Much Tax Deduction Do You Get?
Upon selling your vehicle, your donation amount depends on the selling price.
- If somebody buys your former car or truck for over $500 at one of Eggleston’s local auctions, you can deduct 100% of the selling price.
- Conversely, if your vehicle sells for $500 or lower, the “fair market value” gets deducted up to $500.
- Per IRS guidelines, if the charity keeps and uses your donated vehicle (instead of selling it), you may be eligible to deduct its fair market value.
Use valuation tools like Kelley Blue Book or NADA Guides to estimate the fair market value of your vehicle.
| See IRS Publication 4303 – A Donor’s Guide to Vehicle Donation for more details. |
How Do You Claim Your Tax Credit?
There is paperwork required to ensure your car donation is, in fact, tax-deductible.
Note that your total itemized deductions must exceed the standard vehicle donation tax deduction that aligns with your filing status. Furthermore, be mindful that itemized deductions include home mortgage interest, state/local taxes, out-of-pocket medical expenses, charitable deductions, etc.
Consider speaking with your tax advisor before donating to see if itemizing makes sense.
When an Eggleston tow driver picks up your car, they’ll leave you a “Thank You” card, and you will receive a “Thank You” letter in the mail. Once the vehicle is sold, we’ll issue a settlement letter. We’ll also ensure you receive an IRS 1098-C form before January 31st of the following year to confirm the sale price and date.
Do You Need Lots of Paperwork to Make a Car or Truck Donation?
While receiving your tax deduction of up to $500 does require a little bit of paperwork, the act of donating is considerably more straightforward.
To that point, you only need a valid title for your car or truck.
If you’re missing a valid car title, you may need to ensure you’ve paid off the entirety of your car loan, or you can request a duplicate title from the DMV.
This requirement isn’t complex, but it is ironclad. We cannot accept a car donation without the car title due to the various legal issues it would raise.
How to Maximize Your Car Donation Tax Deduction
Timing your donation
If you want to be able to deduct your car donation, consider donating your vehicle in a year when your other itemized deductions — such as other charitable contributions or state and local taxes — are high enough to eclipse your standard deduction.
Keeping detailed records
For donations of any value, you should keep a record of the name and address of the charity, date and location of the donation, description of the car, and written acknowledgement from the charity.
It is best to keep all paperwork and receipts involved in the donation for at least five years, or longer if it’s a high-value contribution.
Filing your taxes with a car donation
Written acknowledgements of the donation, and the subsequent sale if applicable, are required to be attached and submitted with your tax return when claiming a deduction of more than $500.
For deductions between $250 and $500, you should obtain a written acknowledgment for your records, but you don’t need to attach it to your return.
Forms you need to complete
To claim a tax deduction for your car donation that’s between $501 and $5,000, you need to complete Section A on tax form 8283 (Noncash Charitable Contributions).
If the deduction exceeds $5,000, you also need to complete Section B on the same form.
How to Choose a Legitimate Car Donation Charity
Research is crucial to finding legitimate charities for your tax-deductible car donation.
However, figuring out the best place to donate can be difficult. The internet is a vast information highway. You can feel weighed down by the abundant options.
So, how do you sort the wheat from the chaff, so to speak? What separates a cause you can get behind and believe in from one that doesn’t quite hit home? These are challenging questions since charity is innately good, and choosing one over the other can seem like a guessing game.
We suggest first thinking about what you’re donating. In this case, it’s your car. Therefore, it would make sense to be more specific instead of broad and work with legitimate car donation charities in the automotive sector.
For example, say you’re donating a car in Norfolk, or in nearby communities such as Virginia Beach or Chesapeake, and want your gift to stay local. Eggleston is an easy and rewarding way to make the most of a vehicle you don’t need anymore.
| Ensure the charity is an IRS-qualified 501(c)(3) nonprofit before donating. You can verify a nonprofit’s eligibility using the IRS Tax-Exempt Organization Search. |
Why Choose Eggleston to Donate a Car for a Tax Deduction?
Keeping local with your donation, like choosing Eggleston in Virginia, is often more manageable than other, more generalized charities.
By staying local, you often don’t need to deal with outside agencies that make the process less impactful to the community. Thus, no commission or percentages are doled out. Instead, your donation goes directly to the cause – Eggleston.
Additionally, the vehicle is auctioned locally, ensuring that local bidders benefit. Every dollar yielded from the eventual sale helps fulfill Eggleston’s long-standing mission.
| Did You Know? The Eggleston Auto Center provides job training for people with disabilities through donated vehicle repairs and detailing. |
Who Are You Helping With Your Car Donation to Eggleston?
When you donate your car to Eggleston, we’ll accept it, whether running or non-operational.
From there, people with disabilities in our community benefit from jobs repairing, detailing, and preparing their vehicles for auction.
This process offers these hard-working, eager individuals additional job experience and hands-on education they otherwise wouldn’t receive. Moreover, they’ll develop the necessary collaborative and people skills to improve workplace relationships and customer interactions.
Helping develop our team means you’re contributing significantly to the local workforce. The knowledge and experience our team members gain from your donated vehicle could be a jumping-off point to a successful, long-lasting career that previously wasn’t possible.
How Do You Hand Over Your Donated Vehicle?
Is your soon-to-be donated vehicle inoperable? If so, Eggleston will schedule a tow with you if you’re from Hampton Roads and outlying communities.
You can also drop your donated vehicle off at our Auto Center:
3525 N. Military Highway, Norfolk, VA, 23518
Determine eligibility by giving us a call at 757-963-8393.
FAQs About Car Donation Tax Deductions
1. Can I donate a car that doesn’t run?
Yes! Eggleston accepts both working and non-working vehicles. If it doesn’t run, we’ll arrange for a free tow.
2. Is my donation eligible for a tax deduction?
Yes, as long as you donate to a 501(c)(3) nonprofit like Eggleston and itemize deductions on your taxes.
3. What happens if my car sells for less than $500?
If your car is sold for less than $500, your deduction is the car’s fair market value on the donation date, capped at $500.
4. When will I receive my tax documents?
Eggleston will mail IRS Form 1098-C by January 31st of the following year.
| Donate Your Car Today. Learn about our car donation process here. |
Your Car Donation Will Go Far With Eggleston
Eggleston is proud of our car donation program. We’re dedicated to helping people with disabilities in our community develop necessary life skills that help them thrive and flourish.
Beyond the feel-good benefits of knowing you’re doing the right thing, you don’t need to go through the hassle of selling your car after donating it to us. Whether your vehicle is barely functioning, not functioning at all, or just in the way, we’ll take it off your hands and auction it off—simple as that.
Whether you’re located in Virginia Beach, Hampton, Portsmouth, or Chesapeake, Eggleston’s tax-deductible car donation makes it easy to donate your car locally and support a powerful mission. Our vehicle donation services are tailored to each community we serve, helping your generous gift stay close to home and make a real impact.