We have all seen the ads about donating your car to a worthwhile nonprofit agency to benefit others. The IRS has recently placed stringent substantiation and authorization requirements on this charitable donation field. Donating cars, boats, planes, and other vehicles is a complicated tax matter. We will try to make it a little easier here.
Obtain a written acknowledgement from the charity in order to substantiate the deduction of your vehicle for a claimed value of over $500. This acknowledgement must be either on IRS Form 1098-C or another equivalent statement from the charity. Also, you must receive Form 1098-C 30 days after the charity sold your vehicle – if it was sold to a needy person.
When filing your 2006 tax return, you must attach IRS Form 1098-C or the equivalent statement to it. If you do not, the IRS will not allow your deduction. Also know that cancelled checks will not be considered sufficient proof of payment.
Form 8283 must also be attached if your donated vehicle is more than $500.
If your donated vehicle is valued at less than $250, you will not need a Form 1098-C. You will only need a written acknowledgement meeting the IRS guidelines. tax tips.
Tax Tip: Your donated vehicle must be in good working order to qualify for the tax deduction.
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