New publications focus on car donations

Two new publications dealing with car donations have been released by the Internal Revenue Service as part of an effort to help taxpayers avoid potential pitfalls when they donate automobiles to charities.

The Publication 4302, "A Charity's Guide to Car Donations," addresses issues that charities need to know to properly operate car donation programs. The second, Publication 4303, "A Donor's Guide to Car Donations," is focused on individuals who make such donations. For a taxpayer, the appeal of a car donation is simple: unload an old car, help a worthy cause and take advantage of tax provisions. Taxpayers who itemize their deductions may be able to claim a charitable contribution for the cars they donate to charity. The deduction may not exceed the fair market value of the car. In recent years, the number of the car donation programs has increased dramatically. This growth, however, has taken place without taxpayers and charities always understanding their obligations under tax law.

Both publications were written in conjunction with state charity officials, as part of an ongoing effort by state and federal officials to work together to educate taxpayers and charities. Publication 4302 provides descriptions of several different car donation programs, filing and disclosure requirements for charities operating these programs and related information. Publication 4303 reminds taxpayers that they need to make sure they are donating their vehicle to a qualified organization, receive a written acknowledgment from the charity, keep records and properly assess the fair market value of their vehicle. Both publications are available at IRS.gov.