To take a deduction for the full fair market value (FMV) for you donated vehicle requires you to follow specific rules.
First and foremost, you must itemize your return. You itemize if you do not take a standard deduction and file a Schedule A. Next, the charity needs to qualify. To determine whether a charity is qualified visit the IRS's exempt organizations site.
In the rest of this post we will discuss how to determine the FMV, communications you may receive within 30 days of donation, review the forms and discuss exceptions to the FMV donation.
How To Determine Fair Market Value The donor (you), not the charity, determines the FMV. Use a pricing site like KBB.com to help determine FMV. FMV, by definition, is the price a willing buyer would pay and a willing seller would accept for the vehicle.
Communications Within 30 Days
Within 30 days of your donation of the car the charity must provide a letter stating they are not selling the vehicle. If no letter is received then within 30 days of the charity selling the car they must provide the sales price.
How To Deduct Fair Market Value, Form 1098-C
You will want to receive Form 1098-C to keep records of your charitable contribution. Box 4c is your deductible amount and box 6b adjusts your deductible amount.
EXCEPTION to FMV on Form 1098-C; box 5a or 5b checked
If box 5a or 5b is checked off on Form 1098-C, your donation is eligible for an exception, and you can deduct the car's value even if it's more than the reported sale proceeds. To qualify,
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