Is My Car Donation Made in Montana Tax Deductible?
- Donating your car to charity does come with its risks, especially in the case of scams and false promises of tax deductibles. If you want a guaranteed tax deductible, verify the organization's registration with the Montana Department of Justice's Consumer Protection Division, which publishes an online charity search database. You also should visit the IRS's online version of Publication 78, which lists all donation-approved, 501(c)(3) organizations in the state. For a link to both search engines, see Resources.
- Once you have found a reputable and worthwhile charity in Montana, you must figure out your car's worth for the donation receipt. The fair market value of your car will determine how much you can deduct on your federal tax return. You can find your car's FMV by searching on a site such as Kelley Blue Book, but the IRS has strict rules on calculating the FMV on one of these sites. For an IRS publication on how to determine your FMV from a blue book and a link to the Kelley Blue Book website, see Resources.
- When you are ready to donate the car, you must have a copy of your Montana car title in hand. If you have lost the title, you can request a replacement copy from the Montana Department of Justice Motor Vehicle Division. Once you are at the charity, you will need to sign over the car title in person. The website Goodwill Car Donation recommends that you fill out all the transfer paperwork personally and remove the license plate before handing over the keys, which can protect you against any future liability. For a link to the driver services website of the Montana MVD, see Resources.
- If your car's FMV was less than $250, the only tax form you need is Form 1040, Schedule A, which you will use to itemize your deduction. Cars valued at more than $500 need Form 8283, Section A and a copy of the donation receipt, while those worth more than $5,000 need Form 8283, Section B and a written appraisal of the car's worth from a state-certified appraiser. Make sure to keep a copy of your donation receipts, which may be requested by the IRS at a later date.