The answer depends on the type of vehicle charities you work with. Some charities repair vehicles and donate them to people in need. Other car donation programs fix up the vehicles and donate them to auctions where the proceeds go to various charities. A few vehicle charities use the donations to give young people a marketable skill and build self-esteem.
The car donation program you chose should have an easy, hassle free donation process. A few steps will help you avoid fraud. The first step is to make sure the company is regulated. If you donate to an unregulated charity, the receipt they provide you cannot be used for tax purposes.
Vehicle Donations and IRS
Per IRS guidelines, if a car donation program sells a vehicle for under $500 the receipt you receive is all you need for your taxes. If the donation sells for more than $500, you will be provided with a supplemental receipt and may write off an amount up to the sale price.
Vehicle charities can work with you to make sure money is used as you wish. You might have a specific vehicle charity in mind. They may donate a good vehicle, expecting it to be given to a single mother, to someone who needs transportation to chemotherapy appointments or to an older couple living on a small pension. They may also donate a vehicle knowing it’ll be sold to a third party, who will sell it to a used car lot and the money will benefit a charity. Registered companies must offer full disclosure and explain how each used vehicle was disposed of.