Charity

• A tax deduction for the charitable contribution of a car is not available unless you donate it to an IRS-qualified organization. A qualified organization is a non-profit entity that is established pursuant to any United States law, and the laws of its possessions, such as Puerto Rico. The organization's legal structure must be a community chest, corporation, trust, fund or foundation. Furthermore, the organization may not have any operating purpose that does not relate to charitable, literary, humanitarian, scientific, educational or religious causes.
  
  

Must Have Value

• The IRS does not require car donations to meet minimal value requirements to take the deduction; however, any car you donate must in fact have an ascertainable value, regardless of whether it is $20 or $20,000. When you claim a deduction for the donation of a car, the amount you deduct directly relates to its fair market value. Fair market value represents the price a buyer would pay for the car in the open market. When you make the donation, the tax law requires you to assess the car's value using a reputable used-car price guide. When choosing the correct value, you may only reference the private-party price for a car that is comparable in make, model, age, mileage and condition.
  
  

Fifty-Percent-Limit Organization

• The IRS imposes different deduction limitations on donations you make to certain organizations. Some organizations are classified as "50-percent-limit organizations." Donations to any of these charities are deductible in an amount equal to 50 percent of your adjusted gross income. Donations to all other organizations are deductible up to an amount equal to 30 percent of adjusted gross income. The IRS publishes a comprehensive list of all organizations that qualify for the higher limitation. Maximize tax savings by referencing this list before making the donation.
  
  

Vehicle Debt

• Charitable contribution deductions are only available for property you own. If the car you donate has an outstanding loan balance, you do not have full ownership rights in the car. You must reduce the deduction amount by any loan liability the organization assumes. In this situation, you reduce the fair market value of the car by the amount of loan balance the charity assumes. However, if you finance the original purchase of the car with a credit card, no reduction is necessary since the credit card company does not have a legal claim on the car in the event you default on credit card payments.