Giving your old car to charity? Don’t expect a big deduction

Giving your old clunker to a charity can be a noble move—but most of the time, you won’t get a big deduction.

You used to be able to donate your old car to a charity and deduct the book value. The book value is the amount that an auto dealer could get for the car.

Now, you can only deduct the amount of money the charity expects to get by selling the car—and that’s usually a lot less than book value.

If you claimed a deduction of more than $500 for your car, make sure the charity gives you a Form 1098-C (contributions of motor vehicles, boats, and airplanes). You must file this form with you federal tax return.

Stricter Rules on Donating Clothing, Furniture, Etc.

Cars aren’t the only issue. Donated property like clothing, furniture, electronics and appliances now must be in “good condition or better” to qualify for a deduction. A receipt from a charity stating “3 boxes and 3 bags of clothing” won’t be adequate.

If you claimed a total deduction of more than $500 for all contributed property, you must file Form 8283 with your tax return and provide the name and address of each charity and describe the items you contributed.

For contributions of property worth more than $5,000, except publicly traded securities, you must obtain a written appraisal, and your Form 8283 must be signed by both the appraiser and the charity.

Charitable contributions of artwork, land, life insurance policies, collectibles, antiques, etc. may require additional substantiation and appraisals, and it’s wise to consult with a tax professional first.

Bob DiQuollo is a Certified Financial Planner (CFP) a Certified Public Accountant (CPA) and a Personal Financial Specialist (PFS) at Brinton Eaton Wealth Advisors and can be reached at diquollo@brintoneaton.