The Estimate Of Your Auto Donation To A Veteran’s Charity

Donating your car to a veteran's charity is a great way to add a deduction to your 2022 tax return. According to Charity Navigator, Americans donate over $2.5 billion every year to 40,000 U.S. military-related charities. Keep in mind that any charity that you donate your car to must be a registered 501(c)(3) nonprofit organization. Otherwise, you cannot take a deduction for the car.

Once you find the nonprofit charity that you wish to donate your car to, you need to find the fair market value of your vehicle before determining how much you can deduct on your taxes.

Determining Your Car's Fair Market Value Using KBB

Some people use online sources to get an estimate of what their car is worth. How do you use an online evaluation to find the fair market value of your car? Assess your vehicle's overall condition. Does the car have excessive mileage, visible rust or dents? List anything that no longer works, like the air conditioning or the defrost. Be honest with yourself so you can get the best estimate of your car's value. You won't list the value of a car that doesn't run well under "excellent condition" when it is truthfully a car that is in "fair condition."

Next, take the make, model and year of your car and look for it in the private-party value listing, not the dealer listing. The private party value is what you could expect to pay if you buy a car from a private seller. The dealer value is a dealership's resale price range. You just want an estimate of your car's fair market value so you can donate it, not sell it to another person or through a dealership.

How Will Your Chosen Charity Use Your Donation?

Usage determines how much you can deduct from your donation. Per the Internal Revenue Service, if the charity sells your donated car, your deduction is limited to that sale price — no matter if it is less than fair market value. If the organization decides to keep the car, then you can deduct the private party value listing. Always get usage documentation from the organization because you will need it to back up your deduction should you be audited.

No charitable deduction will be complete without the title of your vehicle changing hands with the organization. Once it does, you can take the deduction and be glad that you were able to help a veteran in need. If you're interested in car donations for veterans, contact a local charity.