Tax Deductions for a Car Donation in California

Many people donate cars in California because they want to give back to the community. But the underlying reason that most people donate cars to charity is that they want to gain a tax deduction at the end of the year on their income tax return. However, there are many tax laws for car donation in California that donors should be aware of before they donate a car to charity.

First, you should be aware that in most cases you will not be able to claim a very large deduction for your car donation in California. The amount of your tax deduction for a car donation in California is limited by several factors. Two of these factors that will affect just about any donor are the amount that the car is sold for and the tax bracket that you fall under.

The amount of your tax deduction is first based on the fair market value of the car you have donated. Fair market value is not the same as blue book value, so do not be confused by this terminology. There are several good web sites that can give you the fair market value of your car based on your neighborhood, make, model, year, and condition.

If the charity sells the car donation in California, and the fair market value is more than $500, you are only entitled to claim the amount that they sold the car for, not the fair market value. The charity must give you a receipt for your car donation in California, stating the amount that the car was sold for. This receipt must be attached to your income tax return in order to claim the tax deduction for your car donation in California.

If the charity keeps the car donation in California or the car is valued at under five hundred dollars, you will be able to deduct the fair market value of the car donation in California on your income tax return. You will need to provide evidence of the fair market value price that you claim, however.

The other main factor that determines the amount of your tax deduction for a car donation in California is your tax bracket. If you are in a thirty three percent tax bracket, for example, you will only be allowed to claim thirty three percent of the total of your donation. Again, this car donation in California amount is determined by the amount that the car is sold for, or the fair market value, depending on what the charity does with the car donation in California and the value of the car donated.