Charities that Sell Donated Vehicles

• If your car is immediately sold by the charity, your deduction is limited to the price the car fetched at the auction. For example, if your car was sold for $2,000, you can only deduct $2,000 from your taxes even if the fair market value equals $5,000.
  
  

Charities that Use Donated Vehicles

• If the charity you donate your car to uses the vehicle, or sells it at a reduced price to a needy family as part of the charity's work, you can deduct the fair market value of the car from your taxes.
  
  

Reporting Your Deduction

• Your car deduction is reported as a property donation on line 17 of Schedule A. If your deduction is greater than $500, you must also complete Form 8283.
  
  

Tax Savings Vary

• The amount of money you will save on your taxes from donating your car depends on what tax bracket you are in. For example, if you are in the 15 percent tax bracket, a $2,000 deduction would save you $300; however, that $2,000 deduction would save you $560 if you were in the 28 percent tax bracket.
  
  

Considerations

• If the deduction for your car and the amount of your other itemized deductions does not exceed your standard deduction, you should not itemize your deductions and you will not reap any tax benefits.