Can a Car Donated to Clergy Be a Tax Write-off?

You must itemize your deductions to write off your charitable contributions.

You must itemize your deductions to write off your charitable contributions.

The Internal Revenue Service allows you to reduce your taxable income, and thus the amount of income taxes you are liable for, by letting you write off certain expenses, such as your mortgage interest, real estate taxes and donations to charitable organizations. Your charitable contributions don't have to be in cash. You can make donations of merchandise, such as a car, but the IRS has strict rules about how those donations are made and accounted for.

Qualified Organization

The IRS allows a tax deduction only for contributions to a qualified organization. The organization must be operated for religious, charitable, educational, scientific or literary purposes. Organizations that work for the prevention of cruelty to children or animals and those that foster amateur sports competitions might qualify to receive tax deductible donations. Certain war veterans' organizations and fraternal societies also qualify. The organization you wish to donate to should be able to provide you with evidence of its qualification. When in doubt, check with the IRS. It maintains a complete list of all qualified organizations.

Individuals

You can't deduct donations that are made directly to individuals, such as a member of the clergy. Likewise, you can't deduct donations made to an organization that employs members of the clergy if you stipulate that the donation is for the benefit of a specific member of the clergy. For example, you can't take a tax deduction for donating your car to your local church with the provision that it be used by the pastor. You can take a tax deduction if you donate your car to your local church, and the church then provides the car to the pastor for his use. It is a subtle, but significant difference.

Mutual Benefit

Any donation of a car you make to a charitable organization, whether it is ultimately used by a member of the clergy or for some other purpose, must be made with no recompense to you, or you can't take a tax deduction for the contribution. For example, if you donate a car to your church in exchange for tuition for your grandchild at the church's preschool program, you have received a mutual benefit. You cannot deduct the amount of this donation.

Considerations

The IRS allows you to deduct only the fair market value of any car you donate to a ministry organization. The fair market value is the price a willing seller would accept for the car and a willing buyer would pay. It is not the same as the car's retail value, and is usually significantly less than the retail price. If the fair market value exceeds $250, you'll need to get a written acknowledgment from the organization. If your donated car is valued at more than $500, you must complete IRS From 8283, and if it is more than $5,000, you have to get the car appraised by a qualified appraiser.

 

About the Author

Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps.

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